Rapid internationalization provides firms with quick access to global markets, but also constrains their capacity to absorb the expansion. Identifying the resources and capabilities that are most likely to moderate the relationship between rapid internationalization and performance is, therefore, of great interest. We focus on the software service industry in the specific context of the Indian emerging economy and investigate the role of linkage, leverage and learning capabilities. We use a unique longitudinal dataset from the Indian software sector as a setting to test our posited relationships and our findings largely support our predictions.
A growing body of research has focused on the internationalization of multinational enterprises (MNEs) from emerging markets (EMNEs) and identified important ways in which they differ from MNEs from developed markets (Cuervo-Cazurra, 2012; Guillén & García-Canal, 2009; Luo & Tung, 2007; Mathews, 2002, 2006). EMNEs may possess less traditional ownership advantages, but they compensate by using market and non-market advantages emanating from their home country institutional environments (Cuervo-Cazurra & Genc, 2008; Kothari, Kotabe, & Murphy, 2013; Luo & Tung, 2018). They are also said to possess different types of ownership advantages such as a deep understanding of customer needs in emerging markets and the ability to function in difficult business environments (e.g., Cuervo-Cazurra & Genc, 2008; Ramamurti, 2012). Unlike their counterparts from developed markets, EMNEs use internationalization to gain competitive advantage in both foreign and domestic markets (Gaur, Kumar, & Singh, 2014; Luo & Tung, 2007) and often their M&A activity is driven by strategic reasons, such as to obtain essential technologies or competencies rather than to promote efficiency or instant growth (Kumar, 2009; Mathews, 2017; Popli, Akbar, Kumar, & Gaur, 2017). This line of inquiry has observed that the EMNEs internationalize more rapidly than their developed market counterparts (Deng & Yang, 2015; Guillén, 2002; Mathews & Zander, 2007; Sun, Peng, Ren, & Yan, 2012) or at least more rapidly than the stages model would suggest (Ramamurti, 2012). While both developed market MNEs as well as EMNEs may pursue rapid internationalization, it is a greater need for EMNEs because they are driven by a motivation to catch-up with the established mature multinationals (Kumarasamy, Mudambi, Saranga, & Tripathy, 2012; Luo & Tung, 2007). Given this, there is a need to understand better which advantages can help with successful internationalization and which not (Ramamurti, 2012). The internationalization speed literature, accordingly, has increasingly shifted its focus to studying the resources that have the potential to moderate the relationship between speed of internationalization and firm performance (SI-P) (Chang & Rhee, 2011; Garcia-Garcia, Garcia-Canal, & Guillen, 2017). Perspectives, such as Linkage-Leverage-Learning (LLL) and Springboard theory have been advanced to explain EMNEs' rapid internationalization (Luo & Tung, 2007; Luo and Tung, 2018; Mathews, 2006, 2017). However, these new emergent theoretical perspectives do not specifically address the performance implication of rapid internationalization. To fill this lacuna and contribute to the new emergent perspectives on EMNEs, we investigate the resources that moderate the SI-P relationship in the context of Indian software service industry. We use the internationalization speed literature along with the LLL perspective to examine the service EMNEs' capabilities, such as, knowledge acquisition and linkage capabilities, customer leveraging capabilities, and learning and its retention capabilities.