Geographic Scope, Product Diversification and the Corporate Performance of Japanese Firms

Strategic Management Journal, Vol. 20, 1999

Posted: 20 Jun 2002

See all articles by Andrew Delios

Andrew Delios

National University of Singapore (NUS) - Department of Business Policy

Paul W. Beamish

University of Western Ontario - Asian Management Institute

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Abstract

This paper examines the relationships between geographic scope, product diversification and the corporate performance of Japanese multinational enterprises. The model developed and tested in this paper extends research on the geographic scope-performance relationship by exploring both the antecedents and consequences of geographic scope. We test our research model with data on the corporate performance of 399 Japanese manufacturing firms. The path analytic (Partial Least Squares (PLS)) approach taken in this study emphasizes the integrated nature of these relationships and points to the different performance outcomes as a firm undertakes investments in new product areas, in proprietary assets and in international markets. We find performance to be higher in more multinational firms. That is, geographic scope and proprietary assets, particularly in highly product diversified firms in Japan, has strong positive associations with the performance of Japanese firms. We find that geographic scope is positively related to firm profitability, even when controlling for the competing effect of the possession of proprietary assets. This finding demonstrates that expansion into new geographic markets was an effective strategy for improving the performance of Japanese firms in the 1990s.

Note: This is a description of the paper and not the actual abstract.

Keywords: FDI, Diversification, Multinationality, Performance, Japan, foreign investment

Suggested Citation

Delios, Andrew and Beamish, Paul W., Geographic Scope, Product Diversification and the Corporate Performance of Japanese Firms. Strategic Management Journal, Vol. 20, 1999, Available at SSRN: https://ssrn.com/abstract=315461

Andrew Delios (Contact Author)

National University of Singapore (NUS) - Department of Business Policy ( email )

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Paul W. Beamish

University of Western Ontario - Asian Management Institute ( email )

Richard Ivey School of Business
London, Ontario N6A 3K7
Canada
519-661-3237 (Phone)
519-661-3700 (Fax)

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