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The relationship between international diversification and firm performance: Why it remains a puzzle
Author(s) -
Wiersema Margarethe F.,
Bowen Harry P.
Publication year - 2011
Publication title -
global strategy journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.814
H-Index - 24
eISSN - 2042-5805
pISSN - 2042-5791
DOI - 10.1002/gsj.5
Subject(s) - diversification (marketing strategy) , subsidiary , scope (computer science) , conceptualization , business , international business , phenomenon , industrial organization , economic geography , empirical research , perspective (graphical) , multinational corporation , economics , marketing , finance , management , physics , quantum mechanics , artificial intelligence , computer science , programming language , philosophy , epistemology
Despite a wealth of empirical research, whether and how international diversification impacts firm performance remains one of the major unresolved research questions in the fields of strategy and international business. We propose that the lack of consensus about the nature of the international diversification–firm performance relationship results from a failure to fully grasp this complex phenomenon. Using data on trade flows of U.S. companies and their foreign subsidiaries, we provide a more focused and comprehensive perspective on the activities that define the geographic scope of U.S. companies that we hope will motivate a conceptualization of international diversification that encompasses the full range of activities that determine the geographic scope of a firm.