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Organisational learning as a mediator in the host-home country similarity–international firm performance link: the role of exploration and exploitation

Unai Arzubiaga (Department of Financial Economics I, University of the Basque Country UPV/EHU, Bilbao, Spain)
Julen Castillo-Apraiz (Department of Financial Economics II, University of the Basque Country UPV/EHU, Bilbao, Spain)
Jesús Manuel Palma-Ruiz (Faculty of International Economics, Universidad Autónoma de Chihuahua, Chihuahua, Mexico)

European Business Review

ISSN: 0955-534X

Article publication date: 8 August 2020

Issue publication date: 6 April 2021

295

Abstract

Purpose

This study aims to shed light on the lack of understanding and previous mixed results regarding why and how some internationalised firms take advantage of host-home country similarity (HHS) while others do not.

Design/methodology/approach

Direct and mediating hypotheses are examined through an empirical investigation of 156 CEOs in internationalised Spanish companies, using structural equation modelling validated by factor analysis.

Findings

The results suggest that exploitation (EI) and exploration (ER) constitute important learning mechanisms that impact on the liability of foreignness when internationalising a business. In particular, the positive influence that HHS has in international firm performance (IP) depends on both exploitative and exploratory learning.

Practical implications

This research adds insights into the importance of two of the main components of organisational learning (i.e. ER and EI) as mediators of the HHS and IP relationship, which can help senior managers or business owners make consistent decisions by matching potential international market locations with firm learning factors.

Originality/value

This study clarifies contradictory theoretical assertions and mixed empirical results about how HHS impacts on international performance. In particular, by responding to recent calls for research, this study has shown that organisational learning is a key component in the aforementioned link where ER and EI positively mediate this relevant relationship.

Keywords

Acknowledgements

This study was financially supported by MCIU/AEI/FEDER-UE under the grant number RTI2018-097579-B-100; by UPV/EHU under the grant number GIU19/057; and by Fundación Emilio Soldevilla para la Investigación y el Desarrollo en Economía de la Empresa (FESIDE) foundation. The authors also highly appreciate the institutional support received from the Family Business Centre of the UPV/EHU in collaboration with the DFB/BFA.

Citation

Arzubiaga, U., Castillo-Apraiz, J. and Palma-Ruiz, J.M. (2021), "Organisational learning as a mediator in the host-home country similarity–international firm performance link: the role of exploration and exploitation", European Business Review, Vol. 33 No. 3, pp. 409-426. https://doi.org/10.1108/EBR-09-2019-0238

Publisher

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Emerald Publishing Limited

Copyright © 2020, Emerald Publishing Limited

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