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Balancing growth across geographic diversification and product diversification: A contingency approach

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  • Hashai, Niron
  • Delios, Andrew

Abstract

We theorize that firms simultaneously seek to balance their growth across both the geographic and product diversification domains. To achieve this balance, businesses commonly adopt a strategy of expanding an under-diversified direction at the expense of an over-diversified one. Accordingly, we depict geographic diversification and product diversification as being an endogenous relationship, from which we hypothesize that firms that have under-diversified in a given direction and over-diversified in the other will expand the former at the expense of the latter. Meanwhile, firms that have under-diversified in both directions will expand both diversification paths, while firms that have over-diversified in both directions will contract in both diversification routes. We investigate these predicted relationships and show them empirically using a sample of leading Japanese multinationals in the 1990–2000 period.

Suggested Citation

  • Hashai, Niron & Delios, Andrew, 2012. "Balancing growth across geographic diversification and product diversification: A contingency approach," International Business Review, Elsevier, vol. 21(6), pages 1052-1064.
  • Handle: RePEc:eee:iburev:v:21:y:2012:i:6:p:1052-1064
    DOI: 10.1016/j.ibusrev.2011.11.009
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    1. repec:spr:manint:v:55:y:2015:i:4:d:10.1007_s11575-014-0232-5 is not listed on IDEAS
    2. Ref, Ohad, 2015. "The relationship between product and geographic diversification: A fine-grained analysis of its different patterns," Journal of International Management, Elsevier, vol. 21(2), pages 83-99.
    3. Kafouros, Mario & Wang, Elizabeth Yi, 2015. "Technology transfer within China and the role of location choices," International Business Review, Elsevier, vol. 24(3), pages 353-366.
    4. Drozdz, Jolanta & Volkov, Artiom, 2015. "Food market diversification approach - Lithuanian case," Problems of Agricultural Economics: Annals 240753, Institute of Agricultural and Food Economics - National Research Institute (IAFE-NRI).

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