Ph.D Workshop

26/11/2013 - 14:15

דרורי נתנאל: אסטרטגיה


Drivers of international diversification and their relationship with product diversification and a firm's financial performance

The strategic management literature deals extensively with two main growth strategies: international diversification and product diversification. Previous research examined the relationship between these two strategies and the relationship of the two with financial performance (both separately and jointly). Despite decades of research the results are inconsistent and the conclusions are vague. In this paper, we develop a model which can contribute to reducing the obscurity about these two relationships.
The starting point for coping with these two issues is by investigating the impact of four factors and proclivities which characterize the process of globalization (the industry level of: standardization, extent of using the Internet, off-shoring intensity, and foreign direct investment) that can drive and lead a firm to expand internationally. The model demonstrates how the four factors positively drive the international diversification level of industries, which are characterized by them. As international diversification level increases it will affect the relationship between the two types of diversification and their relationship with financial performance. In industries which are influenced by the factors, an increase of the level of international diversification will occur and consequently moderate the negative relationship with product diversification. In addition, the levels of combined diversification work together to mediate the relationship between the four factors and performance.


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