Crossing Boundaries: Internationalization and Industry Switching in Response to Performance Feedback

Why do firms cross geographical or industry boundaries, initiating internationalization or industry switching? To address this question, I combined the behavioral theory of the firm with the resource-based view, while considering the boundary conditions of the institutional environment and industry competition. I found that high-performing firms are more likely to initiate internationalization, while low-performing firms tend to switch industries. Furthermore, high institutional development level and high industry competition attenuated the propensity of internationalization, whereas high industry competition accentuated the tendency of switching industries. Results based on census data containing 54,393 local industrial enterprises in China from 2007-2013 support my predictions.