Home country uncertainty and the international-performance relationship: Building an uncertainity management capability

We analyze the impact of home country uncertainty on the internationalization-performance relationship of

emerging market firms. Building on organizational learning theory and the institutional approach, we argue that

internationalization has a positive impact on the performance of emerging market firms, and that this relationship

is strengthened for firms based in emerging countries with higher corruption and political risk. The

reason is that by being exposed to high levels of home country uncertainty in the form of political risk and

corruption, firms develop an uncertainty management capability at home that helps them face the challenges of

internationalization better. We also propose that this uncertainty management capability helps emerging market

firms perform better outside of their home region. We test our arguments on a sample of 536 firms from

Argentina, Brazil, Chile, and Peru.