The Relationship between Product and International Diversification: The Role of Experience

Strategic Management Journal, Forthcoming

20 Pages Posted: 2 Jun 2014

See all articles by Michael Mayer

Michael Mayer

University of Bath - School of Management

Christian Stadler

University of Warwick - Warwick Business School

Julia Hautz

University of Innsbruck

Date Written: May 31, 2014

Abstract

We establish prior diversification experience as a key determinant of the relationship between growth of product and international diversification. Prior diversification experience allows firms to overcome short run constraints on simultaneous diversification growth imposed by the difficulty to transfer tacit knowledge, ambiguous competencies, and limited absorptive capacity. Studying U.S. and European firms we find a positive relationship between growth in product and international scope for firms with high and a negative one for those with little prior diversification experience. Further we find that product diversification experience has greater impact than international diversification experience.

Keywords: diversivication, internationalization, corporate strategy, experience

JEL Classification: L1

Suggested Citation

Mayer, Michael and Stadler, Christian and Hautz, Julia, The Relationship between Product and International Diversification: The Role of Experience (May 31, 2014). Strategic Management Journal, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2444122

Michael Mayer

University of Bath - School of Management ( email )

Claverton Down
Bath, BA2 7AY
United Kingdom

Christian Stadler (Contact Author)

University of Warwick - Warwick Business School ( email )

Coventry CV4 7AL
United Kingdom

HOME PAGE: http://www.wbs.ac.uk/about/person/christian-stadler/

Julia Hautz

University of Innsbruck ( email )

Universit├Ątsstra├če 15
Innsbruck, Innsbruck 6020
Austria

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