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The relationship between global integration and performance in multinational professional engineering companies

by Osegowitsch, Thomas

Abstract (Summary)
This study investigates the link between global integration -- defined as the intra-firm cross-border transfer of operational resources -- and performance in multinational professional engineering companies. Using a combination of qualitative and quantitative techniques, we find some support for a positive association. We review two bodies of scholarship germane to our topic: the global integration - performance literature and the multinationality - performance literature. The inclusion of the latter is justified since the espoused performance benefits of multinationality are predominantly realised through global integration. Based upon an evaluation of these two bodies of scholarship and qualitative insights, we propose a positive relationship between global integration and performance as well as a mediating relationship, with global integration acting as a mediator between multinationality and performance. Hypothesis testing is performed in Partial Least Squares, a structural equation modelling technique ideally suited for small samples. Results reveal a significant positive association between global integration and MNC profitability. A separate research model testing the relationship between global integration and the alternative dependent, MNC growth, is rejected. Further analysis of the profitability-based research model provides support for the mediational hypothesis: the relationship between multinationality and profitability is fully mediated, suggesting no gains from multinationality per se. Supplementary tests reveal that the profitability effects of global integration are enhanced when it is strongly motivated by the desire to take advantage of specialised skills within the MNC; no such claim of moderation can be made when global integration is strongly motivated by a desire to improve staff utilisation on a global basis. The relationship between global integration and profitability is also unaffected by the origins (headquarters vs. subsidiaries) of the intra-firm operational resource transfers that constitute global integration.
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Source Type:Master's Thesis

Keywords:international business enterprises management intra firm trade engineering firms

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Date of Publication:01/01/2004

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