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Regional diversification and firm performance

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  • Gongming Qian

    (The Chinese University of Hong Kong, Hong Kong, PRC)

  • Lee Li

    (York University, Canada)

  • Ji Li

    (Hong Kong Baptist University, Hong Kong)

  • Zhengming Qian

    (Xiamen University, Xiamen, PRC)

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    Abstract

    This study examines how regional diversification affects firm performance. The results indicate that regional diversification has linear and curvilinear effects on firm performance. Regional diversification enhances firm performance linearly up to a certain threshold, and then its impact becomes negative. The results also show that firms of developed countries maximize their performance when they operate across a moderate number of developed regions and a strictly limited number of developing regions. This explains why internationalization by most international firms is regional rather than global. Journal of International Business Studies (2008) 39, 197–214. doi:10.1057/palgrave.jibs.8400346

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    Bibliographic Info

    Article provided by Palgrave Macmillan in its journal Journal of International Business Studies.

    Volume (Year): 39 (2008)
    Issue (Month): 2 (March)
    Pages: 197-214

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    Handle: RePEc:pal:jintbs:v:39:y:2008:i:2:p:197-214

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    Cited by:
    1. Lee, In Hyeock & Rugman, Alan M., 2012. "Firm-specific advantages, inward FDI origins, and performance of multinational enterprises," Journal of International Management, Elsevier, vol. 18(2), pages 132-146.
    2. Fisch, Jan Hendrik & Zschoche, Miriam, 2011. "Do firms benefit from multinationality through production shifting?," Journal of International Management, Elsevier, vol. 17(2), pages 143-149, June.
    3. Paul Chiou & Cheng-Few Lee, 2013. "Do investors still benefit from culturally home-biased diversification? An empirical study of China, Hong Kong, and Taiwan," Review of Quantitative Finance and Accounting, Springer, vol. 40(2), pages 341-381, February.
    4. Yang, Yong & Mallick, Sushanta, 2014. "Explaining cross-country differences in exporting performance: The role of country-level macroeconomic environment," International Business Review, Elsevier, vol. 23(1), pages 246-259.
    5. Pitelis, Christos & Teece, David, 2010. "Cross-border Market Co-creation, Dynamic Capabilities and the Entrepreneurial Theory of the Multinational Enterprise," MPRA Paper 23301, University Library of Munich, Germany.
    6. In Lee & Matthew Marvel, 2014. "Revisiting the entrepreneur gender–performance relationship: a firm perspective," Small Business Economics, Springer, vol. 42(4), pages 769-786, April.
    7. Rugman, Alan M. & Oh, Chang Hoon, 2010. "Does the regional nature of multinationals affect the multinationality and performance relationship?," International Business Review, Elsevier, vol. 19(5), pages 479-488, October.
    8. de Jong, Gjalt & van Houten, Jerry, 2014. "The impact of MNE cultural diversity on the internationalization-performance relationship," International Business Review, Elsevier, vol. 23(1), pages 313-326.
    9. Hutzschenreuter, Thomas & Horstkotte, Julian, 2013. "Performance effects of international expansion processes: The moderating role of top management team experiences," International Business Review, Elsevier, vol. 22(1), pages 259-277.
    10. Chen, Chiung-Jung & Yu, Chwo-Ming Joseph, 2012. "Managerial ownership, diversification, and firm performance: Evidence from an emerging market," International Business Review, Elsevier, vol. 21(3), pages 518-534.
    11. Anja Schmiele, 2012. "Drivers for international innovation activities in developed and emerging countries," The Journal of Technology Transfer, Springer, vol. 37(1), pages 98-123, February.
    12. Hsu, Chia-Wen & Lien, Yung-Chih & Chen, Homin, 2013. "International ambidexterity and firm performance in small emerging economies," Journal of World Business, Elsevier, vol. 48(1), pages 58-67.
    13. Qian Cher Li & Andrea Mina & Bruce S. Tether & Karl Wennberg, 2011. "Diversification and Human Capital as Antecedents of Internationalization amongst Professional Service Firms: A Study of UK Based Engineering Consultants," DRUID Working Papers 11-15, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.

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