Country resource environments, corporate diversification strategies, and firm performance

Extant corporate diversification research often assumes away contextual differences among countries. This dissertation brings country environmental contexts to the foreground and maintains that different country resource environments embody diverse sets of opportunities and constraints. Country resource environments provide firms with economic capital (for transformational activities) and social capital (for transactional activities). Finns draw on their environments for resource inputs to develop specific capabilities. Corporate diversification strategies are reconceptualized as strategic actions to facilitate firms' resource acquisition or utilization for developing competitive advantages. By employing a multidisciplinary, integrative approach, this dissertation builds a comparative conceptual framework to explain the performance implications of various corporate diversification strategies associated with dissimilar country resource environments.;Four sets of hypotheses were tested on a sample of firms in six Western European countries, representing country resource environments with higher and lower levels of resources. By and large, the performance implications of various corporate diversification strategies were found to differ between country resource environments, as hypothesized. Product diversification is negatively related to performance in country environments with higher levels of resources but positively related to performance in country environments with lower levels of resources. Outbound international diversification benefits firms in country environments with higher levels of resource however, a negative relationship between outbound international diversification and performance in country environments with lower levels of resources was not found. No relationship was found between inbound international diversification and performance in either type of country resource environment. In country environments with higher levels of resources, the interaction between product diversification and outbound international diversification has a negative effect on performance. In country environments with lower levels of resources, the interaction between product diversification and inbound international diversification has a positive effect on performance. The findings support the central proposition that country resource environment is a core component in the study of corporate diversification.;In reconceptualizing corporate diversification strategies and comparing their performance implications between different country resource environments, this dissertation provides a fresh approach to understand corporate diversification. Furthermore, the conceptual framework developed in this dissertation may have important implications to other topics in strategy and international business.