IDEAS home Printed from https://ideas.repec.org/p/msb/wpaper/2014-01.html
   My bibliography  Save this paper

Globalization and Diversification Strategy: A Managerial Perspective

Author

Listed:
  • Harry P. Bowen

    (McColl School of Business, Queens University of Charlotte)

  • H. Kent Baker

    (Kogod School of Business, American University)

  • Gary E. Powell

    (McColl School of Business, Queens University of Charlotte)

Abstract

This study presents survey evidence about managerial views on how the processes of globalization affect managers’ strategic decisions regarding a firm’s international and product market scope. Our purpose is to assess whether managerial behaviors are consistent with theoretical predictions and whether managerial decisions about firm scope are consistent with the findings of recent empirical research. Our findings generally support those of academic research on the impacts of globalization on managerial decisions concerning firms’ strategic scope, but raise questions about findings to date on the nature of a relationship between product and international diversification and their impact on firm performance. Our findings serve as a check on the results of extant research and offer guidance for future research.

Suggested Citation

  • Harry P. Bowen & H. Kent Baker & Gary E. Powell, 2014. "Globalization and Diversification Strategy: A Managerial Perspective," Discussion Paper Series 2014-01, McColl School of Business, Queens University of Charlotte.
  • Handle: RePEc:msb:wpaper:2014-01
    as

    Download full text from publisher

    File URL: ftp://ftp.drivehq.com/msbftp/repec/pdfs/wpapers/msbwp2014-01.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. K. N. M. Dundas & P. R. Richardson, 1980. "Corporate strategy and the concept of market failure," Strategic Management Journal, Wiley Blackwell, vol. 1(2), pages 177-188, April.
    2. Thomas Hutzschenreuter & Florian Gröne, 2009. "Product and geographic scope changes of multinational enterprises in response to international competition," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 40(7), pages 1149-1170, September.
    3. 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;Academy of International Business, vol. 34(1), pages 5-18, January.
    4. Martin Glaum & Michael-Jörg Oesterle, 2007. "40 years of research on internationalization and firm performance: More questions than answers?," Management International Review, Springer, vol. 47(3), pages 307-317, June.
    5. Baker, H. Kent & Singleton, J. Clay & Veit, E. Theodore, 2011. "Survey Research in Corporate Finance: Bridging the Gap between Theory and Practice," OUP Catalogue, Oxford University Press, number 9780195340372.
    6. Gareth R. Jones & Charles W. L. Hill, 1988. "Transaction cost analysis of strategy‐structure choice," Strategic Management Journal, Wiley Blackwell, vol. 9(2), pages 159-172, March.
    7. Bowen, H.P., 2007. "The empirics of multinationality and performance," Vlerick Leuven Gent Management School Working Paper Series 2007-17, Vlerick Leuven Gent Management School.
    8. Krugman, Paul, 1980. "Scale Economies, Product Differentiation, and the Pattern of Trade," American Economic Review, American Economic Association, vol. 70(5), pages 950-959, December.
    9. David J. Denis & Diane K. Denis & Keven Yost, 2002. "Global Diversification, Industrial Diversification, and Firm Value," Journal of Finance, American Finance Association, vol. 57(5), pages 1951-1979, October.
    10. John A Doukas & L H P Lang, 2003. "Foreign direct investment, diversification and firm performance," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 34(2), pages 153-172, March.
    11. Bowen, H.P. & Wiersema, M., 2007. "International and product diversification: their interrelationship and impact on firm performance," Vlerick Leuven Gent Management School Working Paper Series 2007-6, Vlerick Leuven Gent Management School.
    12. Constantinos C. Markides, 1995. "Diversification, restructuring and economic performance," Strategic Management Journal, Wiley Blackwell, vol. 16(2), pages 101-118.
    13. Harry P. Bowen & Margarethe F. Wiersema, 2005. "Foreign‐based competition and corporate diversification strategy," Strategic Management Journal, Wiley Blackwell, vol. 26(12), pages 1153-1171, December.
    14. Sanjai Bhagat & Andrei Shleifer & Robert W. Vishny, 1990. "Hostile Takeovers in the 1980s: The Return to Corporate Specialization," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 21(1990 Micr), pages 1-84.
    15. Mike W Peng, 2004. "Identifying the big question in international business research," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 35(2), pages 99-108, March.
    16. J. Michael Geringer & Paul W. Beamish & Richard C. Dacosta, 1989. "Diversification strategy and internationalization: Implications for mne performance," Strategic Management Journal, Wiley Blackwell, vol. 10(2), pages 109-119, March.
    17. Andrew Delios & Paul W. Beamish, 1999. "Geographic scope, product diversification, and the corporate performance of Japanese firms," Strategic Management Journal, Wiley Blackwell, vol. 20(8), pages 711-727, August.
    18. J. Michael Geringer & Stephen Tallman & David M. Olsen, 2000. "Product and international diversification among Japanese multinational firms," Strategic Management Journal, Wiley Blackwell, vol. 21(1), pages 51-80, January.
    19. W. Chan Kim & Peter Hwang & William P. Burgers, 1989. "Global diversification strategy and corporate profit performance," Strategic Management Journal, Wiley Blackwell, vol. 10(1), pages 45-57, January.
    20. Johny K. Johansson & George S. Yip, 1994. "Exploiting globalization potential: U.S. and japanese strategies," Strategic Management Journal, Wiley Blackwell, vol. 15(8), pages 579-601, October.
    21. Davies, Stephen W. & Rondi, Laura & Sembenelli, Alessandro, 2001. "Are multinationality and diversification complementary or substitute strategies?: An empirical analysis on European leading firms," International Journal of Industrial Organization, Elsevier, vol. 19(8), pages 1315-1346, September.
    22. David J. Teece, 2003. "Towards an Economic Theory of the Multiproduct Firm," World Scientific Book Chapters, in: Essays In Technology Management And Policy Selected Papers of David J Teece, chapter 15, pages 419-446, World Scientific Publishing Co. Pte. Ltd..
    23. Giovanni Gavetti, 2005. "Cognition and Hierarchy: Rethinking the Microfoundations of Capabilities’ Development," Organization Science, INFORMS, vol. 16(6), pages 599-617, December.
    24. Margarethe F. Wiersema & Harry P. Bowen, 2008. "Corporate diversification: the impact of foreign competition, industry globalization, and product diversification," Strategic Management Journal, Wiley Blackwell, vol. 29(2), pages 115-132, February.
    25. Birger Wernerfelt, 1984. "A resource‐based view of the firm," Strategic Management Journal, Wiley Blackwell, vol. 5(2), pages 171-180, April.
    26. Klaus E. Meyer, 2006. "Globalfocusing: From Domestic Conglomerates to Global Specialists," Journal of Management Studies, Wiley Blackwell, vol. 43(5), pages 1109-1144, July.
    27. Teece, David J., 1980. "Economies of scope and the scope of the enterprise," Journal of Economic Behavior & Organization, Elsevier, vol. 1(3), pages 223-247, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Zúñiga-Vicente, José Ángel & Benito-Osorio, Diana & Guerras-Martín, Luis Ángel & Colino, Alberto, 2019. "The effects of international diversification on the link between product diversification and performance in a boom and bust cycle: Evidence from Spanish firms (1994–2014)," Journal of International Management, Elsevier, vol. 25(4).
    2. Mircea Fulea & Gabriela ?andru & Stelian Brad & Mihaela Maftei, 2015. "A New Entrepreneurial Decision-Making Support Framework for Assessing Business Line Correlations," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 17(S9), pages 1198-1198, November.
    3. Caren B Scheepers & Camrin Roberts Maher, 2019. "Leadership’s Thinking Process with Contextual Intelligence in Executing Diversification Strategy," Journal of Economics and Behavioral Studies, AMH International, vol. 11(1), pages 73-89.
    4. 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.
    5. Mircea Fulea & Gabriela ?andru & Stelian Brad & Mihaela Maftei, 2015. "A New Entrepreneurial Decision-Making Support Framework for Assessing Business Line Correlations," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 17(Special 9), pages 1198-1198, November.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Zúñiga-Vicente, José Ángel & Benito-Osorio, Diana & Guerras-Martín, Luis Ángel & Colino, Alberto, 2019. "The effects of international diversification on the link between product diversification and performance in a boom and bust cycle: Evidence from Spanish firms (1994–2014)," Journal of International Management, Elsevier, vol. 25(4).
    2. Phuong V. Nguyen & Hien Thi Ngoc Huynh & Hoa Doan Xuan Trieu & Khoa T. Tran, 2019. "Internationalization, Strategic Slack Resources, and Firm Performance: The Case Study of Vietnamese Enterprises," Journal of Risk and Financial Management, MDPI, Open Access Journal, vol. 12(3), pages 1-24, September.
    3. Belderbos, René & De Michiel, Federico & Sleuwaegen, Leo & Wu, Shubin, 2021. "Global market integration, efficiency orientation, and drivers of foreign subsidiary divestments," Journal of World Business, Elsevier, vol. 56(5).
    4. Bowen, H.P. & Wiersema, M., 2007. "International and product diversification: their interrelationship and impact on firm performance," Vlerick Leuven Gent Management School Working Paper Series 2007-6, Vlerick Leuven Gent Management School.
    5. Demirbag, Mehmet & Glaister, Keith W. & Sengupta, Abhijit, 2020. "Which regions matter for MNEs? The role of regional and firm level differences," Journal of World Business, Elsevier, vol. 55(1).
    6. 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.
    7. Wirginia Doryń & Dorota Stachera, 2008. "Wpływ internacjonalizacji na wyniki ekonomiczne największych polskich przedsiębiorstw przemysłowych," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 11-12, pages 95-114.
    8. Shufeng Simon Xiao & Yong Kyu Lew & Byung Il Park, 2019. "‘2R-Based View’ on the Internationalization of Service MNEs from Emerging Economies: Evidence from China," Management International Review, Springer, vol. 59(4), pages 643-673, August.
    9. 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.
    10. Ljubownikow, Grigorij & Ang, Siah Hwee, 2020. "Competition, diversification and performance," Journal of Business Research, Elsevier, vol. 112(C), pages 81-94.
    11. Danchi Tan & Weichieh Su & Joseph T. Mahoney & Yasemin Kor, 2020. "A review of research on the growth of multinational enterprises: A Penrosean lens," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 51(4), pages 498-537, June.
    12. Yannis Caloghirou & Ioannis Giotopoulos & Alexandra Kontolaimou & Aggelos Tsakanikas, 0. "Inside the black box of high-growth firms in a crisis-hit economy: corporate strategy, employee human capital and R&D capabilities," International Entrepreneurship and Management Journal, Springer, vol. 0, pages 1-27.
    13. 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.
    14. Guerras-Martín, Luis Ángel & Ronda-Pupo, Guillermo Armando & Zúñiga-Vicente, José Ángel & Benito-Osorio, Diana, 2020. "Half a century of research on corporate diversification: A new comprehensive framework," Journal of Business Research, Elsevier, vol. 114(C), pages 124-141.
    15. Assaf, A. George & Josiassen, Alexander & Ratchford, Brian T. & Barros, Carlos Pestana, 2012. "Internationalization and Performance of Retail Firms: A Bayesian Dynamic Model," Journal of Retailing, Elsevier, vol. 88(2), pages 191-205.
    16. Feng, Cong & Patel, Pankaj C. & Sivakumar, K., 2020. "Chief global officers, geographical sales dispersion, and firm performance," Journal of Business Research, Elsevier, vol. 121(C), pages 58-72.
    17. Nguyen, Quyen T.K. & Kim, Sylvia, 2020. "The multinationality and performance relationship: Revisiting the literature and exploring the implications," International Business Review, Elsevier, vol. 29(2).
    18. Humphery-Jenner, M., 2011. "Diversification in Private Equity Funds : On Knowledge-sharing, Risk-aversion and Limited-attention," Other publications TiSEM 3e22d8a9-6846-484f-a09e-7, Tilburg University, School of Economics and Management.
    19. René Belderbos & Leo Sleuwaegen & Reinhilde Veugelers, 2010. "Market Integration and Technological Leadership in Europe," European Economy - Economic Papers 2008 - 2015 403, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    20. Adrian Lüthge, 2020. "The concept of relatedness in diversification research: review and synthesis," Review of Managerial Science, Springer, vol. 14(1), pages 1-35, February.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:msb:wpaper:2014-01. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/sbqueus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: HP Bowen (email available below). General contact details of provider: https://edirc.repec.org/data/sbqueus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.