Testing critical levels in product and geographic diversification: a structural threshold approach
by Pablo Garrido-Prada; Maria Jesús Delgado-Rodriguez; Desiderio Romero-Jordán
European J. of International Management (EJIM), Vol. 16, No. 3, 2021

Abstract: This paper performs a structural threshold regression analysis to test the existence of critical diversification levels in a study of the moderating effect of diversification strategies on performance. The method is applied to a novel panel dataset comprising a sample of Spanish multinational companies from non-financial sectors in 2006-2011. The results reveal that a critical level of geographic diversification is needed to influence positively the product diversification-performance relationship. Moreover, the geographic diversification-performance relationship is not influenced by the level of product diversification. Our results are relevant for understanding the complexity of these strategies.

Online publication date: Mon, 13-Sep-2021

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