Returns to Internationalization: Business Group-Affiliated Firms vs Standalone Firms

The purpose of this study is to explore the differential gains from internationalization for different forms of corporate governance. In particular, we seek to move from the question concerning whether firms are able to generate differential gains from internationalization, to the question of why. Our focus is on ownership structure, and the differential rates at which business group affiliated firms and standalone firms gain from internationalization. Using a unique data set of some 356 standalone and business group affiliated firms, we show that while the marginal gains from internationalization may be greater for standalone firms, business group firms are better able to exploit firm-specific assets, leveraging these into higher returns to internationalization.