Despite the growing importance of CEOs’ international experience (IE), we have yet to gain sufficient insights into its conceptualization and effect on firm outcomes. Based on prior research and work experience models, we suggest a new framework for measuring IE, including three components: length of time, number of countries, and cultural distance, along with their interactions. Drawing upon social and cognitive learning theories, we explore the impact of CEOs’ IE on two outcomes: strategic change and firm performance. We argue that IE components affect the two outcomes by enhancing executives’ international knowledge and general competencies. While international knowledge may affect firm performance directly, general competencies may affect firm performance both directly and indirectly through strategic change. Using a sample of 387 new CEOs, we found that time abroad had a positive effect on strategic change and firm performance, while number of countries and cultural distance positively moderated these relationships. Additionally, we also found that these components affected firm performance both directly and mediated through strategic change. Our findings have important theoretical implications for the conceptualization and impact of CEOs’ IE and practical implications for executive development and promotion.

INTRODUCTION

Executives’ international experience (IE) has been recognized as a valuable resource as firms compete in increasingly globalized markets (Caligiuri & Di Santo, 2001; Carpenter, Sanders, & Gregersen, 2001; Daily, Certo, & Dalton, 2000; Morris, Snell, & Bjo¨rkman, 2016). Prior research has shown that by endowing executives with host countries’ knowledge and networks, IE contributes to the internationalization of a firm and enhances its competitive advantage and performance (e.g., Carpenter & Fredrickson, 2001; Hsu, Chen, & Cheng, 2013; Kim, Pathak, & Werner, 2015). Executives’ IE has received considerable scholarly attention and become an item of interest relative to executive recruitment and promotion (Carpenter et al., 2001; Sanders & Carpenter, 1998). Despite considerable research, there are still some gaps in the literature that need to be addressed in order to advance our understanding of IE and its effect on executive and organizational performance. First, although timebased or quantitative measures, such as the length of time, have been often used in prior research, they are insufficient to capture the multifaceted construct of IE (Takeuchi, Wang, & Marinova, 2005). Researchers have long suggested that work experience consists of various components beyond simply time spent, and firm outcomes are determined not only by individual components, but also the interactions between those components (e.g., Quin´ones, Ford, & Teachout, 1995; Tesluk & Jacobs, 1998). Recent studies have attempted to enrich the conceptualization and operationalization of IE by taking into account its other aspects, such as cultural distance, experience in different regions, and breadth and depth of experience (e.g., Dragoni et al., 2014; Godart, Maddux, Shipilov, & Galinsky, 2015; Selmer, 2002; Takeuchi et al., 2005; Zhu, Wanberg, Harrison, & Diehn, 2016). Yet further research on this issue is warranted (Dragoni et al., 2014; Takeuchi et al., 2005). Second, most previous studies of the consequences of IE have largely focused on its internationalization-related outcomes, such as firm internationalization, modes of entry, and international acquisitions (e.g., Daily et al., 2000; Holm, Eriksson, & Johanson, 1996). According to learning theorists (e.g., Endicott, Bock, & Narvaez, 2003; Fee, Gray, & Lu, 2013; Suutari & Ma¨kela¨, ۲۰۰۷), experience in a particular field might not only enhance domain-specific knowledge and skills in that field, but also result in general personal and professional development. This raises the question of whether IE augments executives’ general competencies and firm outcomes in ways that go beyond specific international knowledge and internationalization-related outcomes. This question has not been adequately addressed in the extant literature (Dragoni et al., 2014). Another related gap in the literature is a lack of understanding of specific processes through which IE affects firm performance, although it has been established in the strategic management literature (e.g., Carpenter et al., 2001; Daily et al., 2000) that IE has a positive impact on firm performance.