Article

Intra-regional Sales, Product Diversity, and Performance in Merchandising Multinationals

Department of Business Economics and Public Policy, Indiana University Kelley School of Business
Journal of International Management (Impact Factor: 1.7). 02/2007; DOI: 10.1016/j.intman.2007.01.001
Source: RePEc

ABSTRACT This study examines the relationships between intra-regional sales, product diversity, and performance of 45 merchandising firms using data from 1997 - 2003. The interaction effects between product diversity and intra-regional sales on performance are explored, using a curvilinear relationship. The analysis integrates three main theories, namely the resource-based view, transaction costs, and organization learning theory. The models measuring a firm’s performance by return on assets (ROA) and return on sales (ROS) show that at high levels of intra-regional sales, small levels of product diversity can generate greater return to a firm but high levels of product diversity may hurt a firm’s performance. Higher levels of intra-regional sales tend to enhance the impact of product diversity on performance. The results are sensitive to the choice of performance measure.

0 Followers
 · 
65 Views
  • Source
    [Show abstract] [Hide abstract]
    ABSTRACT: Empirical studies on international expansion have shown only limited support for the three-stage (S-curve) hypothesis. Whilst the basic concept is intuitively acceptable, the very generality of the paradigm is its weakness in empirical studies. This paper takes a more fine-grained theoretical and empirical approach by distinguishing between the regions covered by different multinational companies. The regional scope covered by a multinational firm makes a substantial difference with regard to its performance. We find that most firms can enhance their performance by focusing on their home region, whilst only a subset of firms operating in both the home and foreign regions show the overall S-curve relationship between multinationality and performance. Certain combinations of product diversification and regional coverage also enhance performance.
    British Journal of Management 01/2014; 25(S1):S42-S59. DOI:10.1111/1467-8551.12019 · 1.52 Impact Factor
  • Source
    [Show abstract] [Hide abstract]
    ABSTRACT: Drawing on regional strategy theory we complement the core effect of firm-specific advantages on the performance of multinational enterprises with an analysis of the performance consequences of home region concentration on firm performance. We also develop hypotheses regarding the effect of foreign entry timing, internationalization speed and international experience on the performance effect of home region concentration. We test our hypotheses against unique longitudinal data from a panel of 128 multinational enterprises in the retail sector whose geographical spread of international activities we traced between 1995 and 2010. Our findings support the predictions of regional strategy theory and highlight the importance of foreign entry timing and internationalization speed in strengthening the positive effect of home region concentration on the performance of multinational enterprises.
    British Journal of Management 01/2014; DOI:10.1111/1467-8551.12013 · 1.52 Impact Factor
  • [Show abstract] [Hide abstract]
    ABSTRACT: Despite the increasing scope for transactional approaches to corporate political activity (CPA) in emerging markets and rising concerns about the use of relational approaches, foreign firms in emerging economies appear to be reluctant to adopt transactional approaches to CPA. Using Resource Dependence theory we argue that criticality of resources, product diversification, integration with other foreign subsidiaries, and business ties may explain why foreign firms adopt a transactional or a relational approach to CPA. We test our hypotheses using a sample of 105 subsidiaries of foreign firms in India. We find that unrelated diversification and close integration with other subsidiaries of their parent firm makes subsidiaries more likely to adopt a transactional approach, whereas local resource criticality and ties to local businesses makes subsidiaries less likely to use a transactional approach to CPA. Our findings enhance our understanding of the factors that determine foreign firms’ choice of approaches to CPA in emerging economies.
    International Business Review 01/2015; forthcoming. DOI:10.1016/j.ibusrev.2014.10.014 · 1.51 Impact Factor

Preview

Download
0 Downloads
Available from