Multinationals' diversification and the risk-return trade-off
Article Abstract:
The risk-return trade-off of multinational firms is examined in the context of global market diversification. The analysis sheds light on Bowman's paradox, which states that there could exist firms with high risks and low returns. Thisfavorable risk-return profile can result from global market diversification. Diversification in this case refers to both product and global market. Analysisof data from 125 multinationals indicates that no clear support is found for the beneficial risk-return effects of product diversification. However, the joint impacts of product and global diversification, with simultaneous control for the industry effect, suggest that operational flexibilities resulting from the diversification program reduce risk and profit fluctuations and increase returns.
Publication Name: Strategic Management Journal
Subject: Business
ISSN: 0143-2095
Year: 1993
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Global diversification strategy and corporate profit performance
Article Abstract:
The product and the international market dimensions of diversification are surveyed in order to examine the impact of global diversification strategy on corporate profit performance. The extent of the firm's international market diversification has an effect on the profit performance impact of related and unrelated diversification. Corporate diversification has distinct and interactive strategic implications. The research is based on a sample of 62 multinationals.
Publication Name: Strategic Management Journal
Subject: Business
ISSN: 0143-2095
Year: 1989
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