The relationship between international diversification and performance in service firms

N. Capar, Masaaki Kotabe*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

423 Citations (Scopus)


International diversification is a growth strategy that has a major potential impact on firm performance. The relationship between international diversification and firm performance has been extensively studied in the international strategy literature. A major gap in the literature has been the non-existence of studies that have examined the effect of international diversification on performance in service firms. Previous studies that have tested the international diversification-performance relationship were based on samples of manufacturing firms. We argue that the form of the relationship between multi-nationality and performance is different in service firms. We provide a theoretical argument for this claim and hypothesize that there is a U-shaped curvilinear relationship between multinationality and performance in service firms. Our sample consists of 81 major German service firms, spanning across four industries. Results show that there is support for a U-shaped curvilinear relationship. Based on the findings, implications and directions for future research are provided.

Original languageEnglish
Pages (from-to)345-355
Number of pages11
JournalJournal of International Business Studies
Issue number4
Publication statusPublished - 2003 Jul
Externally publishedYes


  • International diversification
  • Multinationality
  • Performance
  • Service

ASJC Scopus subject areas

  • Business and International Management
  • Business, Management and Accounting(all)
  • Economics and Econometrics
  • Strategy and Management
  • Management of Technology and Innovation


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