Understanding how multinational firms grow has been a topic of study for several decades, at least as far back as the 1959 publication of The Theory of the Growth of the Firm by Edith Penrose.  The work remains influential to this day, but new research from Cambridge Judge Business School suggests it is too narrowly focused.

The literature review suggests that most of the research into firm growth has focused on the entry and exit of those firms from a single market outside their home market.  It’s a crucial gap, as the researchers believe the experience of a multinational in a single market is but a fraction of their overall growth story.

What’s more, the analysis revealed that a lot of the research in this area focused on the knowledge of a firm’s “host country”, with very little attention given to managerial capabilities and ability to learn, both of which the researchers believe are key to effectively expanding overseas.

“The review synthesises the findings of these journal papers to examine more closely the process of MNE growth including facilitators and constraints relating to growth,” the researchers say. “We compared research in this area and found that one under-examined area was firm-specific learning, so the paper highlights that.”

The researchers hope that their analysis makes it easier for academics and practitioners alike to understand and make sense of the extensive body of literature on the topic over the years, which can often appear scattered across a range of theoretical contexts.

The authors believe that multinational growth can be bolstered by managers with a degree of international experience, both in terms of breadth and depth.  They argue that many subsidiary managers spend much of their career in a single country or region, when they might benefit from a broader experience across a range of markets.

This range of experiences can also help to create a talent pipeline for any leadership opportunities in the firm’s headquarters, as this international exposure is strongly linked to not only effective leadership, but to effective assessment of new opportunities in overseas territories.