Corporate international diversification: the impact of foreign competition, industry globalization and product diversification

Margarethe Wiersema (mfwierse@uci.edu) and Harry Bowen (bowenh@queens.edu)

Vlerick Leuven Gent Management School Working Paper Series from Vlerick Leuven Gent Management School

Abstract: Significant reductions in barriers to international commerce since the mid-1970s have resulted in markets and industries becoming increasingly integrated across nations. A key consequence of industry globalization has been substantially increased levels of foreign competition in the markets of most nations, and in particular in the U.S. marketplace. The changes in competitive conditions facing firms as markets and industries become more globalized are significant economic phenomena that can be expected to impact corporate strategy in general, and corporate international diversification strategy in particular. Despite increasing global economic integration, the impact of industry globalization on corporate strategy is a question that has been largely overlooked in both the strategic management and international business literatures. This paper seeks to fill this important gap by examining the role of both environmental and firm specific factors in shaping a firm’s international diversification strategy. Specifically, we develop a theoretical framework for understanding how industry globalization, foreign competition, and firm product diversification would be expected to influence a firm’s strategic choice of its level of international diversification. We then empirically examine for the predicted impact and importance of these factors in a panel data set of U.S. firms from 1987 to 1993. Our study provides the first empirical examination and evidence that industry globalization and foreign-based competition are statistically significant factors explaining the increased international diversification of U.S. firms.

Keywords: Corporate Strategy; Globalization; International Diversification Note (search for similar items in EconPapers)
Pages: 46 pages
Date: 2005-05-11
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.vlerick.be/en/2620-VLK/version/default/ ... /vlgms-wp-2005-6.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.vlerick.be/en/2620-VLK/version/default/part/AttachmentData/data/vlgms-wp-2005-6.pdf [301 Moved Permanently]--> https://www.vlerick.com/en/2620-VLK/version/default/part/AttachmentData/data/vlgms-wp-2005-6.pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:vlg:vlgwps:2005-6

Access Statistics for this paper

More papers in Vlerick Leuven Gent Management School Working Paper Series from Vlerick Leuven Gent Management School Contact information at EDIRC.
Bibliographic data for series maintained by Isabelle Vandenbroere (library@vlerick.be).