The inverted-U relationship between the degree of internationalization and the performance: The case of Spanish hotel chains

Abstract

This paper analyzes the dynamic relationship between the degree of internationalization (DOI) and economic performance (P) in Spanish hotel firms. A longitudinal dataset for the period 2000–2013 measuring the variables DOI and P has been used to conduct a FGLS cross-section time-series regression analysis. The results pinpointed an inverted U-shaped curvilinear relationship between the variables DOI and P, suggesting that hotel firms face the costs of entering new countries and managing different portfolio of business. The analysis could indicate whether factors related to the development of the international strategic knowledge of hotel chains, the incorporation of new operators in the process or differences between international leisure and urban destinations, could affect this DOI-P relationship.