Spanning political and cultural boundaries: Diversification, internal capital market and performance
Muellner, Jakob Weiss, Martin
Muellner, Jakob
Weiss, Martin
Citations
Altmetric:
Publication Type
Conference Proceeding
Editor
Supervisor
Publication Year
2016
Journal
Academy of Management Annual Meeting Proceedings
Book
Publication Volume
2016
Publication Issue
1
Publication Begin page
Publication End page
Publication NUmber of pages
Collections
Abstract
We augment diversification and internal capital market (ICM) frameworks with an institutional perspective, arguing that the effect of diversification on performance is dependent not only on the specific type of diversification (international or industry) but also on the specific context of a company in terms of its home market and the heterogeneity of its international investments. We believe the value of diversification is contingent on the distances between markets of a firm and we assume that different types of distance (economic, political, financial and cultural) have different effects on firm performance. Our findings suggest that industry diversification has a negative effect on MNE performance, but ICM may be used to counter this effect, especially in times of economic downturn in the domestic market. The effect of international diversification is insignificant and depends on the specific context of a company’s portfolio of international investments. In an exploratory attempt, we find that a politically heterogeneous portfolio of investments may result in a negative performance, whereas cultural distance seems to spur economic performance of the MNE.
Research Projects
Organizational Units
Journal Issue
Keywords
Political Boundaries, Cultural Boundaries