Balancing Growth Across the Geographic and Product Diversification Domains – A Constingency Approach

International Business Review, 21, pp. 1052-1064

14 Pages Posted: 24 Aug 2013

See all articles by Niron Hashai

Niron Hashai

Reichman University - Interdisciplinary Center (IDC) Herzliyah; Hebrew University of Jerusalem - Jerusalem School of Business Administration

Andrew Delios

National University of Singapore (NUS) - Department of Business Policy

Date Written: December 10, 2012

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 to 2000 period.

Keywords: Product diversification, Geographic diversification, Japanese MNCs

Suggested Citation

Hashai, Niron and Delios, Andrew, Balancing Growth Across the Geographic and Product Diversification Domains – A Constingency Approach (December 10, 2012). International Business Review, 21, pp. 1052-1064, Available at SSRN: https://ssrn.com/abstract=2314724

Niron Hashai (Contact Author)

Reichman University - Interdisciplinary Center (IDC) Herzliyah ( email )

P.O. Box 167
Herzliya, 4610101
Israel

Hebrew University of Jerusalem - Jerusalem School of Business Administration ( email )

Mount Scopus
Jerusalem, 91905
Israel

Andrew Delios

National University of Singapore (NUS) - Department of Business Policy ( email )

1 Business Link
Singapore 117591
Singapore
(65) 6874-3094 (Phone)
(65) 6779-5059 (Fax)

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