The Impact of Internationalization on Firm Performance: A Quantile Regression Analysis

In the context of internationalization, we study the impact of a firm?s breadth anddepth on its performance using quantile regression. Quantile regression allows us to study theeffects of internationalization on performance at various quantiles of conditional performancedistribution. Our results suggest that breadth (measured by the number of foreign countrieswhere a firm has direct investments) has positive effects on firm performance (measured byTobin?s Q) and depth (measured by the number of foreign investment sites in top two countriesdivided by total number of foreign investment sites) is negatively correlated with firmperformance. The quantile regression analysis also shows that the impacts of breadth and depthare heterogeneous across levels of performance. The implication is that, for firms with highperformances, their performances are sensitive to internationalization activities; however, forfirms with low performances, the stock market barely recognizes their attempts tointernationalize.