Performance Effects of Global vs. Local Status in International Business: Evidence from Cross-Border Venture Capital Investments
Organizational status, as a type of firm-specific advantage, is generally considered beneficial for firm performance. However, how should status be appropriately defined when a firm operates in multiple markets? Adopting the global versus local perspective of international business research in our analysis of organizational status, we differentiate between status in global and local networks and compare their performance effects in foreign markets by constructing interfirm networks at both global and local levels. To further examine under which circumstances global and local statuses have amplified performance effects, we investigate the contingencies of these relationships by focusing on the role of value chain position and high technology focus. We test our hypotheses using event history analysis of exit performance in cross-border VC investments between 1996 and 2016. Our results suggest that while global status does not have a direct significant performance effect, local status is generally beneficial for firm performance in foreign markets and it is more salient at the upstream end of the value chain but less so in high-tech investments.