International Diversification Strategies

This study explores both the individual impact of geographical diversification and its effect combined with product diversification on small and medium-sized enterprises’ (SMEs) performance. Unlike most prior studies, this study distinguishes between related and unrelated product diversification. The research setting is a sample of manufacturing SMEs (1994–2014). By using dynamic panel data models, the results provide statistical support for the existence of a horizontal S-shaped relationship between geographical diversification and performance. The findings also indicate that while related product diversification positively enhances the performance of those SMEs engaged in geographical diversification (albeit not indefinitely), unrelated product diversification may significantly impair it, especially for SMEs opting for low and high levels of international diversification. Our study reveals that product and international diversification strategies in the case of SMEs are complementary or substitutive strategies depending on the specific type of product diversification strategy and the level of geographical diversification adopted. JEL CLASSIFICATION: F23; L25; M16

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International Diversification Strategies for Direct Real Estate

The Journal of Real Estate Finance and Economics ◽

10.1007/s11146-009-9173-3 ◽

2009 ◽

Vol 41 (4) ◽

pp. 433-457 ◽

Cited By ~ 12

Author(s):

Ivo de Wit

Keyword(s):

Real Estate ◽

International Diversification ◽

Diversification Strategies

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Controlling shareholders and the effect of diversification on firm value: evidence from Indonesian listed firms

Journal of Asia Business Studies ◽

10.1108/jabs-12-2016-0165 ◽

2019 ◽

Vol 13 (3) ◽

pp. 362-383

Author(s):

Rayenda Khresna Brahmana ◽

Doddy Setiawan ◽

Chee Wooi Hooy

Keyword(s):

Firm Value ◽

Family Firms ◽

International Diversification ◽

Foreign Firms ◽

Institutional Setting ◽

Controlling Shareholder ◽

Content Type ◽

Listed Firms ◽

Industrial Diversification ◽

Diversification Strategies

Purpose The purpose of this paper is to investigate whether the presence of controlling shareholder affects the value of diversification based on Indonesian listed firms. It further examines whether the degree of controlling ownership and the types of controlling ownership matter. Design/methodology/approach Panel data were used over the period 2006-2010 with dynamic generalised method-of-moments estimations and it defined diversification as industrial diversification, international diversification or diversification in both. A few different thresholds for the control rights of the largest shareholder are also set. Findings The results show that industrial diversification improves firm value but international diversification does not, while diversified in both strategies discounted firm value. The presence of a controlling shareholder is found to have a significant diversification discount, and the effect is nonlinear, where the entrenchment effect occurs around 20 to60 per cent threshold of controlling across all types of diversified firms. Last, foreign firms are found to enjoy more value from industrial diversification, but it takes an adverse turn when these involve both diversification strategies. Government firms do not seem to be different from family firms. Research limitations/implications The study shows the need to differentiate diversification strategies and account for non-linearity and ownership identity in modelling diversification value. Also, the degree of shareholders’ control can be a significant channel to address the agency issue on diversification value. Practical implications Under the backdrop of unique Indonesian corporate ownership, the presence of controlling owners is shown, and their ownership affects the value of diversification. The entrenchment effect however appears only at a certain range of ownership. This is a crucial guide for the shareholders to ensure an appropriate monitoring system is installed to maximize the shareholder’s value, especially in family firms. Originality/value The value of this paper is twofold. At first, the first empirical evidence on the diversification debate with Indonesian firms for its unique institutional setting is presented. Second, the standard modelling framework to investigate the types of ownership on diversification value is extended, which has rarely been covered in previous investigations.

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