Inderscience Publishers

Institutional development, economic liberalisation and firm internationalisation

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This study investigates whether differences between developing countries in the extent of institutional development and economic liberalisation explain some variation in the internationalisation patterns of their firms. We suggest that these countries experience a trade–off between inward and outward firm internationalisation decisions. We use a sample of 6,877 firms across 59 developing countries and hierarchical linear modelling to examine the effect of country–level factors on firm internationalisation variables. We find that institutional development is related to outward internationalisation whereas economic liberalisation is associated with inward internationalisation. Younger firms are more likely to take advantage of globalisation opportunities provided by reform.

Keywords: developing countries, institutional development, economic liberalisation, internationalisation patterns, multilevel modelling, globalisation

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