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International Diversification

Author

Listed:
  • Antonio Majocchi

    (University of Pavia)

  • Roger Strange

    (University of Sussex Brighton)

Abstract

International diversification can have both benefits and costs. In this paper, we argue that a firm’s level of international diversification depends not only upon firm-specific characteristics such as its size and the industry to which it belongs, but also upon its ownership structure and the ability of its management to carry out an international strategy. We test our hypotheses using a panel of Italian firms. Our findings show that a high level of family ownership has a negative effect on international diversification, but that an inactive market for corporate control negates this. We found too that when the board of a family-owned firm has a higher proportion of independent directors, international diversification is greater. We also found that similar to the family-ownership effect, a high level of state ownership results in less international diversification. Overall our results confirm that corporate governance variables affect international diversification.

Suggested Citation

  • Antonio Majocchi & Roger Strange, 2012. "International Diversification," Management International Review, Springer, vol. 52(6), pages 879-900, December.
    • Handle: RePEc:spr:manint:v:52:y:2012:i:6:d:10.1007_s11575-012-0148-x
    DOI: 10.1007/s11575-012-0148-x
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