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

Author

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  • 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.

Suggested Citation

  • Harry P. Bowen & Margarethe Wiersema, 2009. "International and Product Diversification: Their Interrelationship and Impact on Firm Performance," Discussion Paper Series 2009-04, McColl School of Business, Queens University of Charlotte.
  • Handle: RePEc:msb:wpaper:2009-04
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    References listed on IDEAS

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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.
    2. Michael C. J. Mayer & Christian Stadler & Julia Hautz, 2015. "The relationship between product and international diversification: The role of experience," Strategic Management Journal, Wiley Blackwell, vol. 36(10), pages 1458-1468, October.
    3. Jouida, Sameh & Bouzgarrou, Houssam & Hellara, Slaheddine, 2017. "The effects of activity and geographic diversification on performance: Evidence from French financial institutions," Research in International Business and Finance, Elsevier, vol. 39(PB), pages 920-939.
    4. Dikova, Desislava & Jaklič, Andreja & Burger, Anže & Kunčič, Aljaž, 2016. "What is beneficial for first-time SME-exporters from a transition economy: A diversified or a focused export-strategy?," Journal of World Business, Elsevier, vol. 51(2), pages 185-199.

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