International diversification and firm performance: Role of information technology investments

School of Business & Economics, Indiana University South Bend, South Bend, IN 46634, United States; Mendoza College of Business, University of Notre Dame, Notre Dame, IN 46556-5646, United States; Division of Management, Price College of Business, University of Oklahoma, Norman, OK 73019-0405, United States
Journal of World Business 01/2007; DOI: 10.1016/j.jwb.2007.02.004

ABSTRACT The empirical studies to date have not found consistent support for the performance advantages of international diversification. One reason suggested by internalization theory is that leveraging firm specific assets is critical for enhancing performance from international diversification. We develop and empirically test the hypothesis that investment in information technology helps in leveraging firm specific assets across country borders and thereby contributes to enhanced performance from international diversification.

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