The Synergy Effect of Internationalization and R&D Intensity on Firm Performance in Korea: A Perspective Based on Knowledge-Based Theory

Purpose - Based on knowledge-based theory, this study explores the synergy impact of internationalization and R&D intensity on firm performance. Additionally, by integrating the life cycle theory, the research further investigates how the synergy impact between these two factors influences firm performance across firms at different stages of maturity. Design/Methodology - To examine the relationship between internationalization, R&D intensity, and firm performance, this study collected data from 522 non-financial firms listed on the Korea Stock Exchange from 2012 to 2021, establishing panel data. The hypothesis was tested using the Generalized Least Squares (GLS) method, and U-test was also conducted due to the nonlinear relationship between internationalization and firm performance. In addition, robustness analysis was also conducted. Findings - Our results indicate a U-shaped relationship between internationalization and firm performance. R&D has a positive impact on firm performance, and the synergy effect of R&D intensity and the internationalization has a positive effect on firm performance. Moreover, this effect is only significant in mature firms. For young firms, the synergy effects of R&D and internationalization on firm performance is negative. Originality/value - This study makes an important contribution to the business management literature. We emphasize that in the context of globalization, competition among firms is becoming increasingly fierce. Firms should focus on the synergy between internationalization strategy and research and development (R&D) strategy. While acquiring external knowledge, they also need to improve their internal knowledge creation and absorption capabilities. In addition, we highlight that the synergy effects of internationalization and R&D intensity on firm performance depend on the firm maturity.