Firm Diversification and Financial Performance: Evidence from Manufacturing Firms Worldwide
Product and international diversifications are both vital strategies for a firm. Our chapter aims to examine the joint effect of international and product diversification on firm performance, and to uncover what factors augment or weaken this joint effect on firm performance. Drawing on over 13,000 manufacturing firms in the period of 2004–2013, we found that the joint effect of international and product diversification on firm performance is negative. This negative effect tends to become stronger for firms in high-tech sectors, relative to firms in low-tech sectors. In addition, we found that this negative effect is weaker for developed country firms, compared to firms in emerging countries.
We thank for the valuable comments from Davide Castellani and the participants at Academy of International Business (UK and Ireland Chapter) in Reading, 6–8 April 2017, UK. We are responsible for any error that might yet remain.
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