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International and Product Diversification: Their Interrelationship and Impact on Firm Performance

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Author Info

  • Harry P. Bowen

    ()
    (McColl School of Business, Queens University of Charlotte)

  • Margarethe Wiersema

    ()
    (The Paul Merage School of Business, UC Irvine)

Abstract

Managerial decisions regarding the geographic and product market scope of a firm’s activities are the essence of corporate strategy. Yet, our understanding of the relationship between these strategic choices, and how they jointly interact to impact firm performance, remains equivocal; with the results from prior studies yielding more questions than answers. This paper provides a conceptual and empirical contribution to the international business and strategy literatures by presenting an integrative framework that captures the joint and simultaneous nature of the relationships between international diversification, product diversification, and firm performance. Our framework and empirical methods address several methodological shortcomings of prior work and provide robust statistical evidence to substantiate or refute prior empirical findings regarding the empirical linkages between a firm’s corporate strategic scope and its performance. A key aspect of our integrative framework is that is enables us to gain a better understanding of how managerial decisions regarding the firm’s geographic and product market scope interrelate, an issue that has not been the focus of much prior empirical work.

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File URL: ftp://ftp.drivehq.com/msbftp/repec/pdfs/wpapers/msbwp2009-04.pdf
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Bibliographic Info

Paper provided by McColl School of Business, Queens University of Charlotte in its series Discussion Paper Series with number 2009-04.

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Length: 51 pages
Date of creation: 2009
Date of revision:
Handle: RePEc:msb:wpaper:2009-04

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Web page: http://mccoll.queens.edu/
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Related research

Keywords: Corporate Strategy; International Diversification; Product Diversification;

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References

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  1. Eric J. Bartelsman & Wayne Gray, 1996. "The NBER Manufacturing Productivity Database," NBER Technical Working Papers 0205, National Bureau of Economic Research, Inc.
  2. J. Myles Shaver, 1998. "Accounting for Endogeneity When Assessing Strategy Performance: Does Entry Mode Choice Affect FDI Survival?," Management Science, INFORMS, vol. 44(4), pages 571-585, April.
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  10. Mona V Makhija & Kwangsoo Kim & Sandra D Williamson, 1997. "Measuring Globalization of Industries Using a National Industry Approach: Empirical Evidence Across Five Countries and over Time," Journal of International Business Studies, Palgrave Macmillan, vol. 28(4), pages 679-710, December.
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  13. John A Doukas & L H P Lang, 2003. "Foreign direct investment, diversification and firm performance," Journal of International Business Studies, Palgrave Macmillan, vol. 34(2), pages 153-172, March.
  14. N Capar & M Kotabe, 2003. "The relationship between international diversification and performance in service firms," Journal of International Business Studies, Palgrave Macmillan, vol. 34(4), pages 345-355, July.
  15. Farok J Contractor & Sumit K Kundu & Chin-Chun Hsu, 2003. "A three-stage theory of international expansion: the link between multinationality and performance in the service sector," Journal of International Business Studies, Palgrave Macmillan, vol. 34(1), pages 5-18, January.
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Cited by:
  1. Elisabeth Nocker & Harry P. Bowen & Christian Stadler, 2012. "Value Chain Relatedness: Strategic Complementarities and Firm Performance," Discussion Paper Series 2012-03, McColl School of Business, Queens University of Charlotte.

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