Antecedents to firm performance during re-internationalization

Abstract

There is a paucity of research on re-internationalization, where firms re-enter international operations after complete withdrawal from previous international operations. The extant literature is largely silent on what drives firm performance during re-internationalization. We conducted an empirical investigation of re-internationalized enterprises from India to identify key antecedents to firm performance during the re-internationalization phase. Data analysis using partial least squares structural equation modeling (PLS-SEM) indicates that initial internationalization experiences, presence of dynamic capabilities, and organizational commitment to internationalization positively contribute to re-internationalization performance. The findings have implications for firm strategies, organization systems, managerial attention to knowledge management, policies supporting subventions, and for future research into de-internationalization and re-internationalization.

JEL Classification: F23

Keywords

De-internationalization dynamic capabilities emerging economy India internationalization experiences organizational commitment PLS-SEM re-internationalization

1. Introduction

Re-internationalization is the phenomenon where firms internationalize again and afresh after initial failed attempt(s) (Welch and Welch, 2009). Such nonlinear forms of internationalization practices (Gao and Pan, 2010; Surdu et al., 2019) are particularly evident in entrepreneurial and small ventures (Chen et al., 2019), and among firms that mostly concern low-involvement modes of operations such as export-oriented firms (Bernini et al., 2016; Malhotra and Hinings, 2010; Vissak and Francioni, 2013).

Re-internationalization has received scant attention in the extant international business literature. Hardly anything is known about what drives firm performance during re-internationalization. This is surprising, because at least one-fifth of all firms that internationalize exit their international operations (Mudambi and Zahra, 2007). Moreover, de-internationalized firms have a higher propensity to re-internationalize in comparison with firms that planned to internationalize but had never done so in the past (Crick, 2002; Welch and Wiedersheim-Paul, 1980).

As more and more firms that have previously de-internationalized look forward to re-internationalization, researchers, managers, and policymakers need to understand whether and how re-internationalization is different from simple internationalization. Also, international business managers are always motivated to learn what drives firm performance during re-internationalization. This drew our attention to two distinct but related aspects. First, do tacit or latent residues, individually or collectively held in a firm, affect future re-internationalization performance? Second, do dynamic capabilities embedded and brewed from initial internationalization experiences or subsequent stages contribute to re-internationalization performance?

Given the extent of de-internationalization and subsequent re-entry behavior exhibited by firms, it is important to distinguish and study re-internationalizing firms separately. Re-internationalizing firms “represent a distinct group” and “cannot be discounted in the category of newly internationalizing firms” (Welch and Welch, 2009), and it is vital to understand the behavioral differences and other characteristics of these two categories of firms. Such distinctions are captured more profoundly in other streams of studies; for instance, serial or habitual entrepreneurs are given due attention in entrepreneurial research (Hyytinen and Ilmakunnas, 2007; Plehn-Dujowich, 2010). “Renascent entrepreneurs” are identified as a “pervasive phenomenon” in certain contexts (Stam et al., 2008), and more successful than fresh entrepreneurs taking advantage of their experience of learning by doing (Lafontaine and Shaw, 2016).

Scholars have contended that there are conceivable differences in firms’ approaches and actions during re-internationalization compared to regular internationalization (Dominguez and Mayrhofer, 2017; Welch and Welch, 2009). Learning and experiences gained from initial internationalization (Janjuha-Jivraj et al., 2012; Javalgi et al., 2011), experiences encountered during the exit process (Coe et al., 2017), and new international influences occurring during the time-out period (Welch and Welch, 2009), provide a different starting point for re-internationalizing firms as against those firms that are entering international operations for the first time. Previous internationalization experiences (Hultman et al., 2011) can positively impact firms’ export orientation (Boso et al., 2018), and this can contribute to better performance during re-internationalization.

Many firms may have access to or continuity in key personnel from initial internationalization through the re-internationalization phases (Freeman et al., 2013; Peschken et al., 2016). Access to such key personnel, who would have accrued and stored most of the learning and experiences gained from initial internationalization, can be exceedingly valuable when firms re-internationalize (Anderson and Weitz, 1992; Stoian et al., 2018), and could enhance performance during re-internationalization.

Reconfiguration of resources occurs when firms re-enter international markets (Servais and Decker, 2014), augmenting firms’ dynamic capabilities (Prange and Verdier, 2011), and this points to the need to study how such capabilities acquired contribute to firm performance during re-internationalization. As re-internationalizing firms go through varying internationalization stages, changing from domestic to international, back to domestic, and then again to international operations, the possession of dynamic capabilities that helps firms to undertake multiple reconfigurations in their resources to traverse the various stages (Peng and Lin, 2017; Sapienza et al., 2006) is more vital for re-internationalizing firms as against firms internationalizing for the first time.

It is well-established that organizational commitment to internationalization, such as long-term investments in export-oriented activities (Solberg and Durrieu, 2006), can significantly aid firms’ internationalization. In this research, we tried to understand the relevance of such commitment specifically to re-internationalizing firms. Unlike initial internationalization, international commitments made in their previous failed attempts can be helpful when firms attempt to salvage sunk costs made during initial internationalization, which can potentially be a key motivator for firms to re-internationalize (Javalgi et al., 2011; Surdu et al., 2019), and could influence firm performance during re-internationalization.

The differences summarized above suggest that “re-internationalizers should be treated as a distinct group” (Welch and Welch, 2009: 568), as their experiences separate them from newly internationalized firms. It is in this backdrop, we aim to add to the nascent literature on the re-internationalization phenomenon, where no published research has tried to understand the drivers of firm performance during re-internationalization. Almost all of the limited scholarship (Dominguez and Mayrhofer, 2017; Freeman et al., 2013; Janjuha-Jivraj et al., 2012; Vissak and Francioni, 2013) engaged in re-internationalization research, to date, has adopted a qualitative case-based approach and studied a handful of firms to draw findings, all in a developed economy context. Although internationalization from emerging economies has attracted both scholars’ and managers’ attention (Hernandez and Guillén, 2018; Kumar et al., 2013; Luo and Zhang, 2016), re-internationalization has not been studied in the emerging economy context.

We address these gaps by empirically investigating the antecedents to firm performance during re-internationalization. Our key contribution from this study is that we empirically study the less-researched re-internationalization phenomena and advance theoretical conversations highlighting the importance of studying re-internationalization standalone and different from regular internationalization lenses. We respond to the paucity of research on re-internationalization in the emerging economy settings by undertaking a study of re-internationalizing firms in India. Table 1 highlights gaps in the extant literature and our contribution in the context of previous research.

Table 1.

Studies on re-internationalization.

Studies	Method	No. of firms studied	Focus on performance	Developed economy (DE)/ emerging economy (EE)
Welch and Welch (2009)	Conceptual	N/A	No	N/A
Janjuha-Jivraj et al. (2012)	Qualitative, case-based	1	No	DE
Freeman et al. (2013)	Qualitative, case-based	9	No	DE
Dominguez and Mayrhofer (2017)	Qualitative, case-based	5	No	DE
Vissak and Francioni (2013)	Qualitative, case-based (serial nonlinear internationalization)	1	No	DE
This study	Quantitative, survey-based	71^a	Yes	EE

71 firms in a total population of 73 re-internationalized firms in India.

We investigated the following questions in our study: (1) Does the initial internationalization experiences—the skills, knowledge, and familiarity acquired from managing international operations during the initial internationalization period—aid firms in their performance during re-internationalization? (2) Does the continuity of key personnel associated with initial internationalization contribute to re-internationalization performance? (3) Whether possession of dynamic capabilities, including integration, learning, and reconfiguration capabilities, help firms to perform better during re-internationalization? (4) Whether long-term commitments and deployment of resources in activities related to international operations influence re-internationalization performance?

Our study could have broader implications beyond its context. As internationalizing firms commonly exit their international operations and re-internationalize later, it is vital for practitioners to understand what contributes to successful performance when firms re-internationalize, as this can aid them in investing in the right resources, responses, processes, and assets. We expect this study to provide a foundation for future studies on the phenomenon of re-internationalization, as in this study, we empirically conceptualize and test a model comprising antecedents of firm performance during re-internationalization for the first time. Furthermore, to generate robust findings, our research relies on data of almost the entire population of re-internationalized firms based in India in the past three decades.

2. Literature review

Internationalization is a phenomenon that extends activities of a firm beyond national borders in factor markets or product markets abroad or in collaborations (Mathur, 2012). It can take place in either outward activities such as a firm exporting its goods beyond the geographical boundaries of its home territory, licensing or franchising, entering into joint ventures, establishing a foreign commercial presence, or inward activities where a firm involves in importing raw materials or services, cooperative manufacture, countertrade, strategic alliances, or activities in which outward and inward actions are linked to each other (Fletcher, 2001).

Internationalization has been studied from a wide variety of theoretical lenses, such as factor studies (Fletcher, 2001), network approach (Tang, 2011), contingent approach (Carneiro et al., 2008), internalization theory (Buckley and Casson, 1976), economic modeling (Casson, 2018), eclectic paradigm (Dunning, 1980), the resource-based view (Westhead et al., 2001), knowledge-based view (Canabal and White, 2008), cultural dimensions (Hofstede, 1994), process studies (Hadjikhani, 1997; Johanson and Vahlne, 1977), and so on.

De-internationalization characterizes the exit of a firm from its international operations (Benito and Welch, 1997). De-internationalization is not an uncommon phenomenon, especially among small firms or those in their early stages of internationalization (Bonaccorsi, 1992). Firms exit foreign operations due to many factors, financial or economic reasons being the most prominent (Jackson et al., 2004). There could be several other reasons such as compulsory withdrawal from host markets (Akhtar and Choudhry, 1993); financial, portfolio, organizational, or spatial restructuring (Turner and Gardiner, 2007); withdrawal due to difficulties in the home market (Palmer, 2004); proactive strategic moves (Pauwels and Mathyssens, 1999); and hyper-competition (Boddewyn, 1979). In most studies, de-internationalization has been covered for cases of partial exit, that is, firms’ exiting of some markets as opposed to from all their global markets (Palmer, 2004; Turner and Gardiner, 2007).

Re-internationalization, on the contrary, is the re-entry of a firm into international operations after it has withdrawn from all prior international operations. The re-internationalization process, therefore, essentially exhibits at least four sequential stages in (1) initial internationalization, (2) de-internationalization or withdrawal from international markets, (3) a time-out period during which no internationalization activities taking place, and (4) restarting internalization operations (Ali, 2021; Welch and Welch, 2009). Some firms may go through multiple exits and re-entries on their international operations.

However, there is a difference between re-entry to formerly exited international markets (after partial exit) and re-entry to international operations after complete exit (or re-internationalization). Re-entry to specific international markets alone cannot be termed as re-internationalization as it relates to firms’ entry to those specific international markets from which they have withdrawn earlier (even while they continued operations in other territories), whereas re-internationalization (or re-entry after complete withdrawal) relate to firms’ entry to international operations after they have completely exited from all international operations (Welch and Welch, 2009), and not necessarily to the same abandoned international market.

Re-entry of firms into previously abandoned international markets has received some attention in the literature (Javalgi et al., 2011; Vissak and Zhang, 2015). A combination of attractiveness and risks in foreign markets and firms’ capabilities and resources give various options in the modes and scale of re-entry for a firm looking forward to a re-entry opportunity. Among the primary advantages for re-entry as opposed to a de novo entry include superior foreign market knowledge, access to previously developed networks and resources, the experience of various regulatory environments, and an opportunity to salvage sunk costs (Javalgi et al., 2011; Vissak and Francioni, 2013). Some of these could hold good for re-internationalizing firms as well.

A firm that has exited from international operations previously may exhibit tendencies to re-enter internationalization depending on various internal or external factors transpiring during the period of its initial internationalization presence, during the de-internationalization or exit process, as well as during the time-out period from international operations. For example, departures in senior management or changes in firms’ strategic orientation can influence re-internationalization decisions (Janjuha-Jivraj et al., 2012). Also, external changes in environmental, political, competitive, or technical factors can influence a firm’s decision to re-internationalize (Freeman et al., 2013).

Some of the major factors that affect re-internationalization are resources and obligations flowing from prior international operations, re-international drivers occurring after a firm’s initial exit, and experiences during the time-out stage (Welch and Welch, 2009). The legacy from prior international experiences, such as amendments in knowledge, human resources, attitudes, relationships (Harris and Wheeler, 2005), and networks (Zain and Ng, 2006), creates the foundations for a firm’s re-entry process.

2.1. Studies on re-internationalization

In the extant literature on international business, only a handful of studies looked at firms’ re-internationalization. Janjuha-Jivraj et al. (2012) studied Phipps Brothers, a firm established in 1948 in the United Kingdom, and engaged in engineering and electrical supplies. The firm was initially a family-run enterprise, and after exiting initial internationalization, it even struggled in the domestic market. The survival challenges prompted the firm to professionalize its operations by extending managerial roles to non-family members during the reign of second- and third-generation promoters, and this not just helped the firm to thrive in the domestic market, but it also created opportunities for re-internationalization and expansion in foreign markets.

Freeman et al. (2013) undertook a multiple-case study involving nine born-global Australian firms that retreated and subsequently re-entered into international operations. The study found that these born-globals exited from initial internationalization due to external triggers and lack of resources. However, when they found favorable conditions to have emerged, they once again restructured to re-enter international operations as part of their long-term strategy that was always based on global outreach.

Dominguez and Mayrhofer (2017) undertook a multiple-case study on five French manufacturing small and medium enterprises (SMEs) that had withdrawn and subsequently re-entered international markets. SMEs’ internationalization processes were found to follow several stages of increasing, decreasing, and re-increasing commitments to internationalization. The findings suggest that the internationalization orientation, learning, and resilience of the entrepreneurs shaped the re-internationalization paths of these SMEs.

Though not specifically re-internationalization, Vissak and Francioni (2013) studied the case of an Italian firm that engaged in serial nonlinear internationalization by repeatedly exiting and re-entering about 30 international markets where it exported furniture products. The main reason for such extreme nonlinearity was the low-involvement modes it adopted for internationalization, as the firm exported almost only when it received confirmed orders from customers, and had never been proactive in establishing franchisees or branches abroad despite its vast presence.

As indicated previously, re-internationalization has received scant attention from scholars in extant literature. In fact, empirical studies using a quantitative methodology on re-internationalization do not exist. Furthermore, none of the studies had focused on firm performance during re-internationalization, as we had attempted to explore from this study.

3. Conceptual model and hypotheses development

Welch and Welch (2009) conceptualized a model for understanding re-internationalization processes, focusing on the elements of the initial internationalization experiences and the events during the time-out stage, which together contributes toward the creation and changes in international heritage or residues for firms, which in turn set a platform for re-internationalization of such firms. The authors also discuss various external and internal triggers during the time-out stage that could affect re-internationalization.

Unlike Welch and Welch (2009), we are specifically interested to understand the antecedents to firm performance during the re-internationalization phase. Instead of examining the entire re-internationalization process, we focus only on the factors contributing to firm performance during the re-internationalization stage. We discuss these determinants of re-internationalization performance underneath.

3.1. Initial internationalization experiences

Experiential knowledge is a critical asset that aids firms’ successful internationalization (Eriksson et al., 1997; Tang and Gudergan, 2018; Vahlne and Nordström, 1993) as well as re-internationalization. The psychological experiences faced by managers (Nielsen and Nielsen, 2011) during a firm’s initial internationalization attempts, or the residual mind-share, would have an effect on firms’ decision and approach to re-internationalization (Coe et al., 2017; Javalgi et al., 2011).

Firms’ initial internationalization will leave with them an international heritage (Welch and Welch, 2009), as firms accrue experiences from such international operations. These experiences may vary depending on the duration of internationalization activities, the nature of internationalization, the geographical spread of internationalization, and several related and non-related contextual factors. An extended duration of time-out after exit from initial internationalization activities is expected to reduce the utility of initial internationalization experiences during the re-internationalization phase, as the value of factors such as learning, resources, capabilities, competencies, networks, and relationships that a firm acquired during its initial internationalization phase is expected to decay over time (De Holan et al., 2004; Tsang and Zahra, 2008), as new and diverse events and challenges are expected to unfold during the time-out period.

In general, the knowledge, familiarity, and skills acquired from a firm’s initial internationalization operations are expected to stay with firms to a reasonable extent (Chailom and Kaiwinit, 2010), and these experiences, in turn, could play a pivotal role (Anand et al., 2014) when a firm re-internationalizes (Kirca et al., 2012; Xia et al., 2009). The intangible resources such as experiential knowledge, managerial skills, and familiarity in handling international operations may remain with the firm even after the physical presence and tangible resources are withdrawn from international operations (Welch and Welch, 2009). The greater the similarity that the re-entry situation embodies—in characteristics such as country, culture, networks, and lines of business—the greater will be the usefulness of prior international experiences (Zhou and Guillén, 2015).

Irrespective of positive or negative performance and positive or negative vibes (experience) accrued during the initial internationalization period, firms are expected to gain certain skills, knowledge, and familiarity on operating in foreign markets. In other words, when we talk about initial internationalization experiences, we are trying to understand the knowledge, familiarity, and skills a firm gained while handling initial international operations and the utility of such experiences when they re-internationalize.

For instance, firms are expected to learn from errors of omission and commission committed during the initial phase. During re-internationalization, firms get an opportunity to replicate the good practices and activities as they had understood from their initial experiences (Jonsson and Foss, 2011). The initial experiences can help firms decide on entry locations during re-internationalization, whether to go to earlier experienced host nations or to other places with similar or different characteristics. It can also help decide modes of operations a firm takes in its re-internationalization phase—that is, whether to go for low-involvement approaches such as exports or trading via agents, or to go for high-involvement approaches such as joint ventures or own subsidiaries. Learning can help firms manage risks and reduce transaction costs (Kim and Gray, 2017).

Considering all the arguments above, we expect that initial internationalization experiences, in particular, the knowledge, skills, and familiarity firms gained while handling initial international operations, would positively affect the firms’ performance during re-internationalization, as learning from such experiences are expected to help firms to avoid mistakes from the past, wisely choose locations, decide on entry modes, target specific customer segments, and so on. This is not limited to the individual role-holders but can be dispersed across the collectively held knowing and learning embedded, and remains consciously and tacitly within the organizations.

We, therefore, propose the following:

H1. The initial internationalization experiences of an organization are positively related to re-internationalization performance.

3.2. Continuity of key personnel

Individuals, or managers, are among the most critical drivers in an organization’s activities and economic growth (Penrose, 1959; Sheehan et al., 2016). Individuals with prior international exposure play a significant role in the firms’ internationalization, especially in small and entrepreneurial firms (Andersson, 2000; Peschken et al., 2016; Stoian et al., 2018). Furthermore, not all learning from initial international operations would be necessarily documented, and a good extent of such undocumented tacit knowledge stays within the individuals who handled such operations. Therefore, the retention of key personnel involved in internationalization and thereby their learning and experiences from overseeing initial internationalization operations could be beneficial when firms re-internationalize (Anderson and Weitz, 1992) and can positively affect re-internationalization performance (Boyle et al., 2016).

De-internationalization and the strategic rationale associated with the exit can influence firms’ inter-organizational relationships associated with international operations (Bernini et al., 2016). A concept of “beautiful exit” (Alajoutsijarvi et al., 2000) is defined as the cessation of a business relationship without hurting other parties as much as possible, and an “ugly exit” implies that relationships are ruptured, and minimal residue is retained, which otherwise could have been helpful during a re-entry. Despite the possibility of an ugly exit, it has been found (Havila and Wilkinson, 2002) that inter-organizational relationships can overcome the interruptions in market exchange, with the remainder termed as relationship “sediments” (Welch and Welch, 2009). Relationship sediments, which represent more interpersonal linkages than formal organizational bonds, can positively affect restarting internationalization (Stam et al., 2008). Much of such informal knowledge lay within the individuals who were handling initial international operations, and the retention of those individuals can, therefore, significantly contribute to firms’ re-internationalization prospects.

Given the foregoing, we propose the following hypotheses:

H2. Retention of key personnel involved in the initial internationalization of a firm is positively related to re-internationalization performance.

3.3. Dynamic capabilities

Dynamic capabilities are referred to as capabilities related to the integration of market and customer-related information for effective managerial decision-making, learning capabilities involving internal and cross-departmental learning activities, and capabilities that enable reconfiguration of resources in response to rapid changes to market and competitors’ changes and actions (Lin and Wu, 2013). It also relates to firms’ ability to sense and seize opportunities in the market and reconfigure their internal resources to exploit such opportunities (Augier and Teece, 2009; Teece et al., 1997). It is the ability of a firm to purposefully extend, create, or alter its resource base in a dynamic environment to sustain competitive advantage (Helfat et al., 2007; Pérez-Nordtvedt et al., 2008).

Dynamic capabilities not only aid accelerated internationalization of firms (Sapienza et al., 2006; Weerawardena et al., 2007), it also helps firms’ internationalization processes and performance (Peng and Lin, 2017; Pinho and Prange, 2011). The possession of dynamic capabilities is almost indispensable for prospering in the present business environment, which is characterized by globalization and increasing technological advancements (Ali and Rahman, 2020; Luo, 2000). It is necessary and essential for any firm’s overall performance and survival and can play a significant role in a firm’s re-internationalization (Matysiak et al., 2018).

Without proactive engagement with new opportunities and the confidence for that engagement, it is hard to imagine that a firm that withdrew from initial internationalization would attempt again as if nothing had happened or that no lasting impressions on internalizations had formed. Hence, the possession of dynamic capabilities is more vital for re-internationalizing firms, as they need to be engaged in continual watch-out for and capture of newer internationalizing opportunities—for instance, scanning of external markets and competitor actions—and reconfiguring their resources internally to seize opportunities. Moreover, dynamic capabilities equip firms to be proactive in adopting and implementing new technological changes, strategic decisions, and manufacturing processes (Chen et al., 2009; Jantunen et al., 2005), which can aid firms’ re-internationalization.

Firms’ ability to adapt to changes in the market on top of their initial strategic planning leads to superior performance (Ouakouak, 2018). Firms possessing dynamic capabilities are expected to exploit opportunities in international markets or create newer ones by integrating their systems and processes to take advantage of such existing or created opportunities (Lin and Wu, 2013). In this research, we studied such integration capabilities that help firms integrate market opportunities into actionable outcomes in the context of re-internationalization. We also examined the learning capabilities whereby firms continually train their employees, engage in cross-department learning, store and share knowledge, helping them to succeed and perform better in a dynamic environment when they re-internationalize.

Firms entering international markets witness reconfiguration in their resources (Servais and Decker, 2014), and this is particularly evident in re-internationalizing firms. Newly internationalizing firms reconfigure their resources while they transition from domestic to internationalization operations. However, re-internationalizing firms undergo multiple reconfigurations in their resources while they go through multiple internationalization stages, such as domestic to international, then back to domestic, and finally to international operations. Hence, the possession of dynamic reconfiguration capabilities is very vital to re-internationalizing firms. It helps them successfully overcome these transitions through multiple reconfigurations within their resources. Our research also tried to understand the possession of such reconfiguring capabilities and their impact on re-internationalization performance.

Overall, we expected the possession of dynamic integration, learning, and reconfiguration capabilities to aid firms to be pro-active in their re-internationalization efforts enabling them to smoothen or fasten their re-entry to international operations. Such firms are likely to exhibit superior performance better during their re-internationalization phase, as it helps them to quickly adjust to and meet the requirements of the changes and opportunities in their dynamic environment. In this sense, dynamic capabilities can be latently embedded as residues brewing and developing for responding to challenges and opportunities when they arise.

Therefore, we propose the following hypothesis:

H3. Dynamic capabilities of an organization are positively related to re-internationalization performance.

3.4. Organizational commitment to international operations

Organizational commitment to internationalization can be observed from activities such as firms’ resource allocation policies, long-term investments in exports and internationalization, international orientation, and prioritization of exports (Machado et al., 2016; Solberg and Durrieu, 2006; Surdu and Mellahi, 2016). It is well-established that organizational commitment helps regular internationalization, but it is even more vital for re-internationalizing firms. At times, previous commitments made to international operations, such as a possibility to salvage an otherwise sunk cost incurred during firms’ initial internationalization (Javalgi et al., 2011), could attract some firms toward re-internationalization. Though certain sunk costs are irrecoverable (Karakaya, 2000), there always exists a possibility to recover at least a portion of sunk costs (Asplund, 2000), be it either tangible costs such as investments in plants, productions, and marketing facilities (Javalgi et al., 2011), or intangible costs such as advertising, goodwill capital (Mueller and Supina, 2002), relationships, and networks (Holzl, 2005). In this context, the long-term investments and resource allocation a firm made in its initial internationalization (and later abandoned as a sunk cost) can come back into the picture when it attempts re-internationalization.

Exports commitment could also be a function of international exposure in the past (Johanson and Vahlne, 1977) and, therefore, firms with initial internationalization experiences are supposed to be on the higher side as against firms with no prior internationalization experience. However, it is not mandatory that such commitments or long-term investments should have happened in the initial internationalization phase itself. It could very well be initiated during the time-out period when a firm finds or anticipates new opportunities in international markets. Such internationalization commitment can also develop as an outcome of changes in several internal or external variables. For instance, changes in firms’ strategic orientation, structure, changes in the domestic environment, and changes in foreign countries’ socio-political-legal environments can alter the firms’ international commitments.

Organizational commitment or orientation toward international operations helps in better performance during international operations (Behyan et al., 2015). It motivates firms to look proactively toward re-internationalization opportunities and helps firms quickly adapt to the newer conditions and emerging challenges of overseas markets. Accordingly, we expect such commitments would enhance the prospects of better performance during the re-internationalization stage.

We, therefore, propose the following:

H4. Organizational commitment to international operations is positively related to re-internationalization performance.

4. Methods

4.1. Sample selection criteria

The following criteria were used to select firms that have undergone re-internationalization using forex revenue as a proxy indicator for international operations: (1) at least 2 years of international operations during the initial internationalization period, followed by (2) a time-out period of at least 2 years with no international operations, followed by (3) at least 2 years of international operations during the re-internationalization period.

In internationalization research, the limit of 2 years is widely accepted and used, especially in the born-global literature (Chetty and Campbell-Hunt, 2004; Knight, 1996; Rennie, 1993). We used the 2-year limit to exclude sporadic exporting firms involved in irregular exports with short breaks within a year or less. Such firms’ characteristics could be quite different from firms committed to internationalization and then withdrawn (Welch and Welch, 2009). We also excluded firms with forex revenues less than 1% of their total income and below 10 million Indian rupees in absolute value to preclude firms that only had a marginal international exposure.

Applying the above criteria, we made a preliminary shortlist of firms across India using CMIE-Prowess and Capitaline databases for the past three decades starting from 1990. It shall be noted that the period chosen for the study is coinciding with liberalization policies initiated in India during the early 1990s, a policy that significantly altered the behavior of the Indian economy (Khanna and Palepu, 1997). We cross-checked the financial data with the Thomson-Reuters Eikon database and also scrutinized with firms’ annual reports downloaded from EMIS-Emerging Markets Information Science and Insight-DION databases. This exercise, together with data obtained from communications with managers of over a 100 firms initially shortlisted, resulted in discarding firms that failed to meet one or the other criteria (for instance, some firms continued exports via sister entities or subsidiaries, some others had exited international operations once again, some had undergone mergers and acquisitions, and so on). We finally identified 73 firms to have undergone the re-internationalization process in India and continued to have an international presence.

4.2. Data collection and analysis

4.2.1. Questionnaire survey

The survey questionnaire was directed among top management officials of the firms identified to test the developed hypotheses. Data collection was administered over email, telephonic interviews, and direct visits. The administration of the survey was done in the English language. Although English is not the mother tongue of respondents, it is the primary language used for doing business in India, and almost all respondents possessed good proficiency in the language. Moreover, while administering the survey, adequate explanation or clarification was provided wherever necessary, especially as most responses were obtained via face-to-face interactions.

We ensured that the respondents to the survey had witnessed all the internationalization stages of their respective firms, such as starting from initial internationalization to re-internationalization. A continued follow-up over 13 months enabled us to obtain data from almost the entire population of firms, with 71 responses from 73 qualified firms identified for the study (i.e. a response rate of 97.26%). Among these, 57 responses were garnered via direct visits to firms located at 10 major Indian cities. The sample demographic characteristics can be found in Table 2.

Table 2.

Sample characteristics.

Categories	Sample size (n)	Percent
Industry
Trading	10	14.08
Steel	5	7.04
Cotton and blended yarn	3	4.23
Ferroalloys	3	4.23
Computer software	3	4.23
Organic chemicals	3	4.23
Textile processing	3	4.23
Other industries—two firms each (7×2)	14	19.72
Other industries—one firm each (27×1)	27	38.03
Ownership
State	0	0.00
State and Private sector	1	1.41
Private (large business group)	27	38.03
Private (small business group)	43	60.56
No. of employees
<50	7	9.86
50–100	10	14.08
100–500	32	45.07
500–2000	16	22.54
>2000	6	8.45
Revenue (5 year average)
Less than 100 million Indian rupees (INR)	10	14.08
Between 100 and 500 million INR	17	23.94
Between 500 and 2000 million INR	22	30.99
Between 2000 and 10,000 million INR	17	23.94
More than 10,000 million INR	5	7.04
Age (year of incorporation)
Before 1950	4	5.63
Between 1951 and 1971	8	11.27
Between 1972 and 1985	27	38.03
Between 1986 and 1990	17	23.94
After 1991	15	21.13
No. of years of time-out from international operations
2	18	25.35
3	11	15.49
4	16	22.54
5	11	15.49
6–7	8	11.27
8 or more	7	9.86
Total	71	100.00

To measure various constructs in the conceptual model, we adapted scales from published studies on internationalization. The validity and other psychometric characteristics of the scales were well-established. To assess the content and face validity of the questionnaire in the context of our study, we held a dozen interviews with academicians and practitioners. Data were collected using a 7-point Likert scale. Details of the constructs and items used can be viewed in Table 3.

Table 3.

Constructs and items.

Construct	Questions and items	Adapted from
Initial Internationalization Experience (II_Exp)	Q. During your organization’s initial international operations (i.e. during international operations before exit), your organization. . . —had acquired great skills in managing international operations (IIExpSkills) —had acquired significant knowledge about the international operations in your field (IIExpKnwldg) —had acquired great familiarity with the conditions of the international markets (IIExpFamiliarity) Scale: 7-point Likert from Strongly Disagree to Strongly Agree	Chailom and Kaiwinit (2010)
Dynamic Capabilities (DC_Overall)	Q. Kindly tell us about how your organization fare on the following capabilities DIC—Integration capabilities (not mentioned in the survey) —Customer information collection and potential market exploration (DIC_1) —Specialized arrangements to collect industry information for managerial decisions (DIC_2) —Integrating industry-related technologies to develop new products (DIC_3) —Recording and integrating historical methods and experiences in handling firm issues (DIC_4) DLC—Learning capabilities (not mentioned in the survey) —Frequent anticipating industrial knowledge learning program (DLC_1) —Frequent internal educational training (DLC_2) —Knowledge sharing and learning groups establishment (DLC_3) —Frequent internal cross-department learning program (DLC_4) (dropped in the second stage of data analysis) —Knowledge management database for access (DLC_5) DRC—Reconfiguration capabilities (not mentioned in the survey) —Clear human resource re-allocation procedure (DRC_1) —Rapid organizational response to market changes (DRC_2) —Rapid organizational response to competitors’ actions (DRC_3) —Efficient and effective communication with cooperative organizations (DRC_4) Scale: 7-point Likert from Very Low to Very High	Lin and Wu (2013)
Retention of Key Personnel (Rtn_Emp)	Q. Please tell us about the retention of key personnel (including transfer/redeployment in various departments/divisions) after your exit from initial international operations.{Key personnel is defined as individuals who were associated with international operations of the firm: for instance, persons in charge of inter-organizational networking, international marketing, export divisions, etc.} —Retention of Key Personnel (Rtn_Emp) Scale: 7-point range from None (0%) to All (100%)
Organizational Commitment to International Operations(Cmt_Intl)	Q. Tell us about your organization’s commitment to internationalization—You make use of considerable resources to export and internationalization of your organization (CMT_1)—Your investments in export and internationalization are long-term (CMT_2)—Your company prioritizes the development of export when planning the budget (CMT_3)—The survival of management is entirely dependent on the company’s development in international markets (CMT_4)—“Everyone” in your company is in one way or another involved in sales/marketing (CMT_5) (dropped in the second stage of data analysis)Scale: 7-point Likert from Strongly Disagree to Strongly Agree	Solberg and Durrieu (2006)
Re-internationalizationPerformance(RI_Perf)	Q. Please rate your re-internationalization performance (current international performance) on the following parameters:—Sales Volume (RIP_Sales)—Market Share (RIP_MktS)—Profitability (RIP_Prft)—Market Access (RIP_MktAc)—Development of Image (RIP_Image)—Development of Know-How (RIP_Knwhow)—As a whole (RIP_Whole)Scale: 7-point Likert from Very Dissatisfied to Very Satisfied	Jantunen et al. (2005)

4.2.2. Methodology

We used the partial least squares structural equation modeling (PLS-SEM) to test the hypothesized model using the SmartPLS software application. SEM has several advantages over traditional methods. SEM can assess both measurement and structural models, which is not possible in first-generation techniques such as multiple regression (Chin, 1998; Hair et al., 2006). SEM is also helpful to handle the assessment of higher-order latent constructs, such as “dynamic capabilities” used in our study, more efficiently than traditional techniques (Hair et al., 2012).

Although there exist two complementary SEM methods, CB-SEM (Covariance-based SEM) and PLS-SEM, we chose PLS-SEM for our study. PLS-SEM is used when the study’s emphasis is on prediction, as it was in our case, rather than confirmation, where CB-SEM is preferred (Hair et al., 2019). PLS-SEM is also more commonly used for studies in exploratory stages where the theory is not fully developed (Ramkumar et al., 2019; Rigdon, 2016; Sarstedt et al., 2017), as was in our case. PLS-SEM is particularly useful in the context of relatively low sample size and non-normally distributed data (Hair et al., 2014), as was the case with our study. PLS-SEM is also appealing because of the methodological advances and regular improvements being constantly developed (Richter et al., 2016), and has also found good traction in contemporary international business research (Acosta et al., 2018; Hernández-Perlines et al., 2016).

Our study met the minimum sample size requirement conditions for using the PLS-SEM technique, which is the higher among 10 times the maximum number of formative indicators in a single construct and 10 times the maximum number of relationships pointing toward a predicted variable (Hair et al., 2014). There were no formative indicators in our study, and the maximum number of arrows pointing to a predicted variable was four (seven while using control variables). Thus, the minimum sample size required was 40 (70 while using control variables), whereas we had an actual sample size of 71.

5. Data analysis and results

Data were analyzed in a three-step approach. First, a preliminary assessment of the nature and characteristics of the data was performed. Outer analysis and common method variance (CMV) tests were also conducted. All the results were satisfactory, and hence we proceeded further.

To overcome CMV at the respondents’ level, we promised confidentiality to the respondents and requested them to answer each question as honestly as possible, emphasizing that there are no right or wrong answers. We did not provide any incentives to participate in the survey. Furthermore, we conducted the Harman one-factor test (Podsakoff and Organ, 1986) and the common latent factor test (Williams and Anderson, 1994). We used un-rotated principal component analysis in the Harman one-factor test and obtained a desirable result where the first factor explained only 35.079% (the value should be < 50%). As no single dominant factor emerged, CMV cannot be an issue with the data. In the second test also, that is, exploratory factor analysis (EFA) for all the factors put together, we obtained a desirable result of 75.002% (the value should be > 50%). Thus, CMV issues were not found in our data.

In the second stage, we performed scale reliability assessments beginning with assessing Cronbach’s alpha. We also looked at the inter-item correlations and removed one item from the construct “organizational commitment to internationalization” due to weak correlations with other items. We also conducted EFA at the individual construct level. We removed another item from the “dynamic learning capabilities” construct during EFA on all items together due to cross-loading requirements not being met in rotated component matrix analysis. We found all other results on each construct and item to be satisfactory. Hence, we proceeded to the third and final step, that is, the PLS model assessment, after dropping the aforementioned two items.

5.1. PLS model and tests

PLS model was designed to identify the effect of the predictor variables on the predicted variable. We had four direct paths from “initial internationalization experiences,” “retention of key personnel,” “organizational commitment to internationalization,” and “dynamic capabilities” toward “re-internationalization performance.” Being consistent with prior literature (Lin and Wu, 2013; Teece et al., 1997), we modeled “dynamic capabilities” as a second-order latent construct having a reflective-reflective measurement model, with “dynamic integration capabilities,” “dynamic learning capabilities,” and “dynamic reconfiguration capabilities” as the first-order constructs. We also ran an alternate model by including control variables such as age, size (number of employees), and revenue, thus having seven paths leading to the predicted variable “re-internationalization performance.”

We followed a two-step process for PLS tests (Anderson and Gerbing, 1988), that is, first measurement or outer model evaluation was done to assess reliability and validity, and this was followed by structural or path model evaluation to assess the relationships between constructs (Hair et al., 2014).

5.1.1. PLS measurement model evaluation

As mentioned earlier, we achieved the content validity of the latent constructs and items by using prior published measurement items, followed by experts’ reviews (Straub et al., 2004). We checked for construct validity using the measurement model evaluation or confirmatory factor analysis (CFA) in PLS-SEM by testing for convergent and divergent validity (Hair et al., 2014) for all the items used in the final model.

As can be seen from Table 4, convergent validity was assessed from three criteria: (1) construct reliabilities exceeding 0.7; all met (2) average variance extracted (AVE) exceeding 0.5; all met, and (3) indicator reliabilities significant and exceeding 0.7; all met except for one item CMT_4, which was 0.688 (i.e. lower than 0.7), but it was retained as AVE and construct reliability were already met (Hair et al., 2014). Hence, we confirmed the convergent validity.

Table 4.

Measurement model indicators—convergent validity assessment.

Construct	Indicator	Loading(criterion > 0.7)	Cronbach’s alpha(criterion > 0.7)	Composite reliability(criterion > 0.7)	AVE(criterion > 0.5)
Dynamic Capabilities (DC_Overall)	DIC_1	0.7249	0.9455	0.9526	0.6266
	DIC_2	0.7351
	DIC_3	0.7791
	DIC_4	0.7908
	DLC_1	0.7826
	DLC_2	0.8448
	DLC_3	0.7529
	DLC_5	0.8107
	DRC_1	0.8195
	DRC_2	0.8366
	DRC_3	0.8431
	DRC_4	0.7671
DC Integration (DIC)	DIC_1	0.8536	0.8336	0.8894	0.6684
	DIC_2	0.8409
	DIC_3	0.7511
	DIC_4	0.8208
DC Learning (DLC)	DLC_1	0.8074	0.8745	0.9143	0.7277
	DLC_2	0.9074
	DLC_3	0.8582
	DLC_5	0.836
DC Reconfiguration (DRC)	DRC_1	0.8345	0.8926	0.9258	0.7575
	DRC_2	0.9174
	DRC_3	0.8933
	DRC_4	0.8329
Organizational Commitment to Internationalization (Cmt_Intl)	CMT_1	0.8494	0.8918	0.9322	0.8208
	CMT_2	0.808
	CMT_3	0.8526
	CMT_4	0.6885
Initial Internationalization Experience (II_Exp)	IIExpFamiliarity	0.9016	0.8124	0.8778	0.6438
	IIExpKnwldg	0.9217
	IIExpSkills	0.8945
Re-internationalization Performance (RI_Perf.)	RIP_Image	0.7753	0.9098	0.9281	0.6492
	RIP_Knwhow	0.7433
	RIP_MktAc	0.7941
	RIP_MktS	0.8492
	RIP_Prft	0.7432
	RIP_Sales	0.8581
	RIP_Whole	0.8663
Retention of Key Personnel (Rtn_KP)	Rtn_KP	1	1	1	1

Discriminant validity was assessed by two criteria: (1) items’ loadings higher than cross-loadings; all met, and (2) Fornell–Larcker criterion (Fornell and Larcker, 1981), that is, the square root of AVE values higher than the correlation between constructs except between higher-order and lower-order constructs (Hair et al., 2014); all met. Hence, we confirmed the discriminant validity.

Please see Table 5 for the means, standard deviations, and Fornell–Larcker test assessments.

Table 5.

Means, standard deviations, correlations, and discriminant validity assessment.

	Mean	SD	Correlations and Discriminant Validity Assessment (Fornell–Larcker (FL) test)FL test criterion: Square-root of AVE should be greater than individual correlations except between higher-order and lower-order constructs(Diagonals show square root of AVE, other values represent respective correlations)
	Mean	SD	DC_Overall	DIC	DLC	DRC	II_Exp	Int_Cmt	RI_Perf	Rtn_Emp
DC_Overall	4.66	1.41	0.79
DIC	4.75	1.34	0.93	0.82
DLC	4.38	1.42	0.94	0.81	0.85
DRC	4.84	1.44	0.94	0.81	0.82	0.87
II_Exp	5.40	1.18	0.35	0.33	0.29	0.35	0.91
Cmt_Intl	5.17	1.48	0.46	0.41	0.43	0.44	0.25	0.80
RI_Perf	5.34	1.06	0.53	0.50	0.46	0.52	0.46	0.53	0.81
Rtn_KP	4.99	1.54	0.46	0.37	0.50	0.42	0.14	0.17	0.27	Single item

We repeated the same tests for the model with control variables and found results similar to the above, hence satisfactory.

5.1.2. PLS structural model evaluation

The structural model evaluation provides the model’s predictive capabilities and the relationships between constructs (Hair et al., 2014). Before proceeding to the structural model evaluation, we checked for collinearity among the exogenous variables toward the endogenous variable “re-internationalization performance,” as significant levels of collinearity can bias the path coefficients (Hair et al., 2014). We found variance inflation factor (VIF) to be less than 2 (well below the required criteria of being less than 5) to rule out collinearity issues (Hair et al., 2014).

Therefore, we proceeded to the core part of the structural model evaluation, which involves assessing (1) the significance of the path coefficients and (2) R2 values. We also performed post hoc analyses such as (3) the effect size using f² values, (4) the predictive relevance using Q² criteria, and (5) the q² effect size (Hair et al., 2014).

We tested both the models, that is, the primary model without control variables and the alternate model with control variables. Figures 1 and 2 show these two PLS-SEM models with the estimated path coefficients from exogenous to endogenous variables. The results summary of both the structural models can be seen in Tables 6 and 7. All the reported values are for one-tailed tests, as the hypotheses in our study were framed positively.

Figure 1.

Primary model (without control variables) with estimated path coefficients and R².

Figure 2.

Alternate model (with control variables) with estimated path coefficients and R².

Table 6.

Structural model—results summary for the primary model (without control variables).

Hypotheses		Coefficient	T-statistic	p-value	Significance	R ²
H1	II_Exp → RI_Perf	0.2872	3.5505	0.0003	***	0.458
H2	Rtn_KP → RI_Perf	0.0615	0.6060	0.2732	NS
H3	DC_Overall → RI_Perf	0.2455	1.9608	0.0269	*
H4	Cmt_Intl → RI_Perf	0.3365	2.6512	0.0050	**

One-tailed test: *p < 0.05; **p < 0.01, ***p < 0.001.

Table 7.

Structural model—results summary for the alternate model (with control variables).

Hypotheses		Coefficient	T-statistic	p-value	Significance	R ²
H1	II_Exp → RI_Perf	0.2619	2.8868	0.0026	**	0.482
H2	Rtn_KP → RI_Perf	0.0432	0.4201	0.3378	NS
H3	DC_Overall → RI_Perf	0.2407	1.8908	0.0314	*
H4	Cmt_Intl → RI_Perf	0.3428	2.6340	0.0052	**
CV1	Rvn_5yr → RI_Perf	0.1071	0.9744	0.1666	NS
CV2	Size_Emp → RI_Perf	−0.0707	0.5640	0.2873	NS
CV3	Age_YearInc → RI_Perf	0.1151	1.2867	0.1012	NS

One-tailed test: *p < 0.05; **p < 0.01, ***p < 0.001.

For the primary model (without control variables), we obtained an R² of 45.8%. For the alternate model (with control variables), we got an R² of 48.2%; that is, the increment in R² is a minimal 2.4% when we add control variables. Also, none of the path coefficients from the control variables were significant. This minimal increment in R² while adding control variables, together with the path coefficients from control variables toward the endogenous variable not being significant, adds robustness to our study results.

The results indicated support for three of the four hypotheses. Initial internationalization experiences were found to have a positive effect on the re-internationalization performance, with the beta coefficient significant. Hence H1 was supported. Dynamic capabilities were found to have a positive effect on re-internationalization performance, finding support for H3. Organizational commitment to internationalization was found to have a positive effect, supporting H4. The effect of retention of key personnel was not found to be significant, thus failing to support H2.

The coefficient of determination (R² value) is the widely used basis to assess the structural model. R² value can be from 0 to 1, with a higher score demonstrating higher levels of predictive power. We found an R² of 0.458 for re- internationalization performance, which is good in our study’s context, as it is at an exploratory stage (Hair et al., 2014). We also obtained desirable results from post hoc analysis such as calculating f² effect sizes, predictive relevance using Q² criteria, and the q² effect sizes, which can be found in Appendix 1.

6. Discussion and implications

This study extends conceptual discussions on re-internationalization to understand the antecedents to firm performance during re-internationalization based on empirical research. We found that initial internationalization experiences, dynamic capabilities, and organizational commitment to internationalization positively influence re-internationalization performance from the analysis of survey data. These results support our hypothesized relationships.

However, we did not find empirical support for the effect of retention of key personnel on re-internationalization performance, going against our hypothesized relationship. When we delved deeper into the data, we realized this could be a contextual issue of the firms in our dataset, mainly due to two reasons; the low-involvement mode of operations that firms adopted during the initial internationalization stage, and the relatively small size of the firms. We found that most firms in our study operated in low-involvement approaches of international operations, such as direct exports or trading via agents, in the initial internationalization stage. Separate departments/divisions were not formed during this stage. Instead, employees from different departments (for instance, from marketing or sales divisions) were given additional responsibility to handle international operations. These personnel were retained irrespective of de-internationalization or re-internationalization, as their services were required in other departments. For the record, we observed that 33 of 71 firms had retained 80% or more of their key employees, and 45 of 71 firms had retained more than 60%. We also observed that most firms were relatively small enterprises (39 of 71 firms had a 5-year average revenue of less than 1 billion Indian rupees), and certain characteristics of small firms could have influenced the results. For instance, not assigning exclusive personnel for handling international operations or not establishing separate departments/divisions to manage initial internationalization activities can be attributed to the relatively smaller size of the organizations involved. Therefore, we continue to reckon that key personnel may play a significant role in enabling firms to perform better during the re-internationalization phase. This is especially so because we have found that the initial international experiences positively impacted re-internationalization performance.

We also anticipate the continuity of key personnel to have a significant role in re-internationalization performance in medium-sized or large organizations. In such cases, we anticipate our hypothesized relationship should also find support, as we expect some terminations of employees and new hiring to happen in these organizations based on the stages of internationalization. This would be an exciting area to explore for scholars in the future. The size of a firm can be a significant contributor to its organizational dynamics, and thresholds in this regard may have implications for the design of socio-technical systems and commitments to techno-commercial scale and scope in internationalization processes.

International business scholars have researched various aspects and processes of internationalization of both large corporations and small firms, including the determinants of performance in home and host countries (Kafouros et al., 2018; Richard et al., 2009). However, studies have largely overlooked the fact that internationalization is not always a unidirectional process (Surdu et al., 2019; Welch and Welch, 2009). On the contrary, many firms undergo cycles and waves of de-internationalization and re-internationalization before stabilizing a solid presence in international space. Understanding internationalization is incomplete if de-internationalization and re-internationalization undertaken by several firms are not paid due attention (Mohr et al., 2018; Soule et al., 2014).

We make several contributions to the extant literature on international business through this study. First, we studied the under-researched re-internationalization phenomenon and extended scholarly conversations by emphasizing the need to investigate re-internationalization standalone instead of using a regular internationalization perspective. As firms do not always follow a linear path toward internationalization (Vissak and Francioni, 2013), it is essential for scholars to understand the nature and consequences of de-internationalization and re-internationalization to gain a better understanding of the internationalization process (Bernini et al., 2016). Our research findings make a strong case for considering re-internationalization studies as a separate topic worthy of investigation and not generalize it along with regular internationalization.

In this research, for the first time, we empirically examined the re-internationalization phenomenon using a large dataset, covering almost the entire universe of eligible Indian firms (71 of 73 firms) that had undergone the re-internationalization process and had a continued internationalization presence at the time of the study. This is significant, as all the extant studies on re-internationalization (Dominguez and Mayrhofer, 2017; Freeman et al., 2013; Janjuha-Jivraj et al., 2012; Vissak and Francioni, 2013) followed a qualitative case-based methodology wherein they relied on a small sample of firms. We expect the use of a large and exhaustive dataset, which includes almost the entire population of re-internationalized Indian firms, makes our results more generalizable than previous qualitative studies that derive conclusions from studying only a few firms. Of course, this is subject to validation in other contexts, which is an immediate implication of this research.

Through this study, for the first time, we empirically established the positive impact of initial internationalization experiences on firm performance during re-internationalization. This resonates with similar findings in different contexts. For instance, intermittent exporters were found to be taking advantage of the cumulative learning they acquired over a period of disconnected export operations (Love and Máñez, 2019).

We also hypothesized and investigated the positive impact of commitment to international operations on re-internationalization performance. Re-entry to foreign markets often throws up possibilities for firms to salvage some tangible and intangible sunk costs, tackle fresh opportunities, use newer and inexpensive resources, and hence help firm profitability (Chen et al., 2019). In our study, we established a positive relationship empirically.

Though the effect of possession of dynamic capabilities is well-established in the literature on internationalization studies (Peng and Lin, 2017; Pinho and Prange, 2011; Weerawardena et al., 2007), its impact on re-internationalization has neither been argued nor empirically examined. As our research attempted to cover this gap, our findings ascertain the usefulness of dynamic capabilities in the re-internationalization context.

One of the limitations of the extant literature on international business and management is that it is developed primarily based on research conducted in the developed countries in North America and Europe. Our study responds to the call for more research from emerging markets (Burgess and Steenkamp, 2006; Luo and Zhang, 2016). Our study contributes to the research on emerging economies in two broad ways. First, the center of global business activity has been shifting from developed economies to emerging markets in recent decades (Khanna and Palepu, 2006; Sheth, 2011). Thanks to globalization and liberalization, emerging economies, especially the BRICS (Brazil, Russia, India, China, and South Africa) countries, including India, have witnessed significant growth in the recent past (Hill et al., 2017; Kolodko, 2003; Sheth, 2011). These developments warrant more investigation, and ours is an attempt in that direction. Second, this study also brings an opportunity to reverse the flow of international business theory development and testing from the traditional developed economies scenario to an emerging economy context (Meyer and Peng, 2016; Wright et al., 2005).

We expect the attempt we made in this study to identify performance drivers of re-internationalization and extend the conceptual discussions on the re-internationalization phenomenon will motivate future research in various uncovered aspects of re-internationalization to enrich both theoretical and practical understanding of the phenomenon. International business scholars should identify and study re-internationalizing entrepreneurs and firms as distinct entities with “the potential to distort general studies of the nature, speed, and determinants of internationalization” (Welch and Welch, 2009: 575). It is imperative from a research perspective to examine “the full range of the re-internationalization process” (Welch and Welch, 2009: 575) to understand how and what remained from the initial experiences are useful when firms re-enter international operations after a break. Re-internationalizing firms manifest different behavioral dynamics in the form of not only new performance antecedents but also new mediators and moderators for internationalization performance outcomes. Unlike newly internationalizing firms, re-internationalizing firms can exhibit different motivations and speed in the internationalization process. They may also exhibit different firm performance outcomes such as social capital, political networks, and relationships in overseas markets, given their initial experiences. In addition, re-internationalizing firms can better deal with a temporary interruption in the international business due to geopolitical factors and protectionists policies (Amiti et al., 2019).

It shall be noted that the performance drivers that we investigated in this empirical research are distinct for re-internationalizing firms as against newly internationalizing firms. The performance antecedents we identified in the re-internationalization context sets base for future studies. Only re-internationalizing firms possess initial internationalization experiences and a possibility for continued access to key personnel who experienced firms’ initial operations (Welch and Welch, 2009). The dynamic reconfiguration capabilities required for overcoming multiple reconfigurations in resources for navigating multiple internationalization stages are much different for re-internationalizing firms. Moreover, the possibility to take advantage of some of the initial long-term internationalization commitments may give a performance edge for re-internationalizing firms (Javalgi et al., 2011).

6.1. Implications for practice

Firm performance is arguably among the most important aspects that attract managerial attention. Hence, the study’s findings of performance drivers to re-internationalization have valuable practical implications. Managers could harvest learnings by giving attention to how collective knowing and wisdom are tacitly held in organizations to make it articulable.

We expect our study would help managers understand the significance of various factors that lead to better performance during re-internationalization, which could help their execution of international business strategy with a comprehensive picture in foresight, including withdrawal and re-entry strategies. This has become even more pertinent in recent times as we witness disruptions in global trade and global demand reduction due to global financial recession or catastrophic events such as the ongoing COVID-19 pandemic (Konara and Ganotakis, 2020; Sharma et al., 2020). Thus, our findings have clear implications for managers of firms that are forced to retrench from or scale down their international operations, but are waiting to return to internationalization with full force at the next available opportunity.

The finding that the learning and experiences firms gained from initial internationalization, even if it was a failure, was helpful during re-internationalization should motivate managers to explore re-internationalization possibilities rather than being held captive to a negative residual mindset from the initial failure. This provides a strong impetus for managers to invest in knowledge management systems that can facilitate access, articulation, and assimilation of such learning and experiences gained from initial international operations so that they can make use of it when firms re-internationalize. Effective use of knowledge management processes helps businesses appropriately deploy organizational learning to be resilient to industry opportunities, match and compete with rivals, and complete innovations, leading to better firm performance (Jaber and Caglar, 2017; Obeso et al., 2020).

We have also found dynamic capabilities to be an important differentiator toward better firm performance in the re-internationalization stage. This calls for managers’ attention to be proactive in searching for newer opportunities in international markets, even while they have withdrawn from initial international operations, and equip themselves with sensing capabilities and exploit such opportunities with internal resource configurations wherever necessary. Moreover, dynamism and unpredictability in global markets have reached a new zenith in recent years due to the neo-protectionism measures adopted by several countries resulting in increased prices in intermediate and final products (Amiti et al., 2019). In other words, managers need always be alert to the changes in a dynamic environment and quickly adapt and reconfigure as opportunities reckon in international markets, leading to better performance for firms when they re-enter international markets.

We had also found that firms’ commitment to internationalization, including having a strategic orientation and resource allocation toward internationalization are some of the prominent factors that helped firms perform better during re-internationalization. Managers of de-internationalized firms looking forward to successful re-internationalization might want to invest some of their resources in these aspects. The solid message from the findings of our study for managers is that failure is neither fatal nor final.

The results from this study also have implications for policymakers, who would be able to grasp a better understanding of the effect of their supportive policy actions (such as subventions) on internationalization, de-internationalization, and re-internationalization of firms, and this understanding may be helpful for them to use their regulatory powers in an informed manner. We suggest regulatory authorities should support de-internationalized firms to re-internationalize, as the study indicates that learning and experiences from the initial failed attempts are useful for firms when they re-internationalize, which in turn can advance the economic prosperity of nations.

6.2. Limitations and directions for future research

This research has used scales and measures from previously published research related to international business for administering the survey. We suggest future researchers develop scales specifically from a re-internationalization perspective for further investigations. As we had captured managers’ perceptual self-rating for accessing the survey measures, we accept a possibility of overestimation in performance measure over the actual performance. We acknowledge this as a limitation of the study, but this is a widely accepted practice in international business research (Dimitratos et al., 2004; Jantunen et al., 2005; Prange and Pinho, 2017), primarily because comparing financial or other objective measures of performance of different types of firms are difficult due to heterogeneous attributes (Hult et al., 2008).

Our study did not cover the differences in terms of choice of locations during initial and re-internationalization periods; especially whether they had entered the same markets abandoned previously or different; and whether they re-entered with the same products from initial through re-internationalization. It would be appealing to understand whether firms that re-entered the same abandoned markets performed better or worse than those that entered different locations during re-internationalization. In the context of re-entry to previously abandoned markets, prior research notions that firms have some advantages over de novo entry and certain firms maximize that potential (Javalgi et al., 2011). Researchers might want to incorporate this aspect in the context of re-internationalization, which could throw up some interesting patterns.

We expect our study to serve as a foundation for scholars engaged in re-internationalization research to delve into further investigations. Studying re-internationalization from an entrepreneurial perspective, as against the organizational perspective we had adopted for this study, would make another intriguing research agenda. There is much evidence for the early internationalization of small firms run by entrepreneurs with previous international experience (Bell et al., 2003; Evers and O’Gorman, 2011). The activities of such entrepreneurs, who might have either sold out or failed in their initial ventures and then went on to start new businesses to start international operations immediately, could be studied from an “entrepreneurial re-internationalization” perspective.

An in-depth process study to understand how various factors hypothesized in this study transformed into better performance during re-internationalization would be an immediate research implication flowing from this study. Also, replicating this study in different contexts and geographies can establish the validity of the findings. A comparative study of re-internationalized firms against those firms that re-entered after partially exiting from certain international territories, primarily to identify the differences in firms’ focus, commitment, and approaches toward export-oriented activities during the time-out stage, would make another avenue that could be explored upon. It would be meaningful to determine whether findings from such a study confirm our conceptual assertions that there is a significant difference between these two types of firms.

Another avenue for future research is a comparative study of various characteristics of re-internationalized firms against de-internationalized firms, that is, comparing re-internationalized firms with firms that have just exited but not yet re-internationalized. Furthermore, among de-internationalized, it can be subcategorized to firms that have an intention to re-enter and others that do not. It would be meaningful to find out whether these firms behave differently toward retaining their networks, relationships, and personnel. Moreover, it would also be interesting to compare the performance drivers among these sets of firms.

We have identified the scope of further research in comparative studies distinguishing two sets of firms, newly internationalizing and re-internationalizing firms, to deepen our understanding of how these two different types of firms approach tasks and challenges on multiple dimensions. We hope future studies would provide more evidence on how and why re-internationalization is different from new internationalization, and hence a research strand worthy of more attention can take root in international business theorizing. Policymakers can also structure their subventions and incentives around processes and drivers that facilitate re-internationalization. Practitioners can find solace and encouragement for learning by doing because initial failures are neither fatal nor final, and insights can be seeded for inter-temporal harvesting in re-internationalization.

Footnotes

Appendix 1 Acknowledgements

The authors express sincere gratitude and thanks to the editor and the anonymous reviewers for their constructive comments and feedback during the revisions, which significantly enhanced the presentation and content of the article.

Funding

The author(s) received no financial support for the research, authorship, and/or publication of this article.

ORCID iD

Salman Ali

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