The Influence of Internationalization on Time-Based Competition

Abstract * This paper focuses on the use of time-based strategies by firms to compete more effectively in global markets. Time-based competition focuses on reducing cycle time from every facet of the value-delivery system. Time is regarded as a "fixed" variable and is the pivotal focus of cycle time reduction. * The current study examines the relationship between internationalization and cycle time, and how their interaction relates to firm performance. Key Results * Results of multiple regression analyses indicate a strong positive relationship among internationalization, cycle time, and managers' assessment of firm performance. Facing increased competitive pressure in their home markets, many firms are internationalizing in an attempt to enhance their performance (Harveston/Kedia/ Francis 1999). Despite a significant body of research, it remains unclear whether firms realize increased performance benefits through internationalization (e.g., Geringer/Beamish/daCosta 1989, Kim/Hwang/Burgers 1993). International ventures often operate in rapidly changing, globally integrated industries where swift action may be required for satisfactory performance or even for survival. Perhaps, the realization of performance benefits from internationalization is achieved when internationalization interacts with other factors, such as cycle time reduction, to yield a competitive benefit. The potential importance of cycle time as an adjunct to competitive behaviors reflects the quickened pace of international business activities due to advances in communication, distribution, information, production technologies, and the advent of supply chain management. For example, communications technology such as electronic data interchange, electronic mail, fax, and the Internet have increased the speed of communications across national borders. As firms internationalize, they must come to grips with complex external relationships that must be created and maintained with suppliers and buyers and their own internal operations. Many firms often fail at this juncture because of their inability to deliver goods and services in a timely manner (Autio/Sapienza/Almeida 2000). Thus, failure to compete on time can have serious repercussions among internationalizing finns. At its simplest, cycle time refers to the duration of an organizational process. The notion of cycle time reduction recognizes that a key to success is to reduce the time it takes to perform organizational processes in a manner that reduces cost and/or increases customer service (Wetherbe 1995). To illustrate, we turn to the retail context, in which cycle time refers to the time it takes for a customer's order to be processed and filled. Sam Walton, the founder of Wal-Mart, indicated that many thought the success of Wal-Mart was a result of placing large stores in small cities and evolving to superstores in large cities (economies of scale). However, the real key was having fast inventory turns (economy of time) achieved by replacing inventory with information. Specifically, Wal-Mart, by making use of EDI (electronic data interchange) with its vendors, greatly improved the cycle time for inventory turns and replenishment (Wetherbe 1995). Activities within an organizational process occur when one or several actors combine, develop, exchange, or create resources (such as products) by utilizing other resources. In the manufacturing context investigated here, there are two kinds of activities: transformation and transfer (Hakansson 1987). Transformation activities are characterized by one resource (e.g., a raw material) being improved by the application of other resources (e.g., technology) and are always carried out within the control of one of the actors. Transfer activities link transformation activities, form chains of activities (e.g., supply chains), and necessitate relationships between the focal firm and other actors (e. …