Diplomatic Relations and Firm Internationalization Speed: The Moderating Roles of Trade Openness and Firm Ownership

Drawing on the international relations literature, the purpose of this paper is to investigate whether and when diplomatic relations between countries have an influence on firm internationalization speed. We discover that the friendlier bilateral diplomatic relations between home and host countries, the more beneficial it is to enhance firm internationalization speed. In addition, the higher trade openness of the host country, the smaller contribution of bilateral diplomatic relations for firm internationalization speed in the host country and friendly bilateral diplomatic relations have a stronger positive impact on internationalization speed when the internationalizing home enterprise is a state-owned enterprise (SOE). Our findings not only contribute to both the firm internationalization speed literature and the international relations literature, but also have managerial significance for how enterprises can use the friendly diplomatic relations between countries to improve firm internationalization speed. Keywords Diplomatic relations * Trade openness * Nature of firm ownership * Internationalization speed * International relations JEL Classification F23 * F55
1 Introduction Internationalization speed, defined as the average internationalization state achieved by a firm over a specific period (Casillas & Acedo, 2013; Chetty et al., 2014), has become a core [...]