Replicating the Multinationality-Performance Relationship : Is There an S-curve?

We revisit the empirical relationship between multinationality and performance by attempting to replicate the widely cited S-shape relationship reported in Lu and Beamish (2004). Using a longitudinal and comprehensive database on the population of US MNCs from 1989 to 2007, we find no evidence of an S-shaped relationship; nor do we see a moderating effect of intangible assets. Although our results do show a marginally significant U-shaped association between multinationality and performance for a subsample of manufacturing firms, this relationship disappears once we account for the endogeneity of multinationality. Our study contributes to empirical research on the multinationality-performance relationship, highlighting the need for caution in generalizing results across countries and the importance of controlling for the endogeneity of multinationality when assessing its effect on performance