The impact of international diversification, environmental jolts, and alliance portfolios on firm performance

We investigate the impact of environmental jolts and alliance portfolios on the relationship between geographic scope and firm performance in the global airline industry from 1998 to 2006. While core international business theory argues for a positive relationship between firm performance and its degree of internationalisation, empirical results have been somehow mixed. We argue for a positive linear relationship between geographic scope and firm performance in times of relative tranquillity suggesting that environmental jolts and alliance portfolios moderate this relationship. Environmental jolts and alliance portfolios are expected to respectively reduce and increase the positive effect of geographic scope on performance. However, firms with a considerable alliance portfolio will mitigate the negative effects of environmental jolts on the geographic scope-performance relationship.