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; 13(2). DOI: 10.1016/j.intman.2007.01.001
Source: RePEc


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.

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    • "In addition to the generic study cited above which examines the world's largest 500 firms, there have been a variety of industry and country studies exploring the regional effect. For example, at industry level it has been demonstrated that retail and merchandising firms are predominately regional, see Rugman and Girod (2003), Sukpanich and Rugman (2007). Similarly the world's automobile sector is regional not global, see Rugman and Collinson (2004). "
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