Rethinking the performance implication of regional diversification: The interplay between intra- and inter-regional diversification

Abstract

This study explores how the levels of intra- and inter-regional diversification are associated with multinational enterprise (MNE) performance, both independently and in combination. I argue that the effects of intra- and inter-regional diversification are not linear, and that intra- and inter-regional diversification moderates each other’s effects on MNE performance. This study reveals that both intra- and inter-regional diversification exhibit an inverted U-shaped relationship with MNE performance, with the impact of inter-regional diversification being stronger than that of intra-regional diversification. The result also shows that MNEs with moderate levels of both intra- and inter-regional diversification outperform MNEs with different internationalization patterns. This study concludes that ‘balanced’ intra- and inter-regional diversification can be more crucial for achieving better firm performance rather than the degrees of intra- and inter-regional diversification.