TY - JOUR
T1 - International diversification and the market value of new product introduction
AU - Wang, Chi Feng
AU - Chen, Li Yu
AU - Chang, Shao Chi
N1 - Funding Information:
The authors wish to thank seminar participants at the 2007 Academy of Management Conference for valuable comments. Chi-Feng Wang acknowledges funding from the National Science Council in Taiwan ( NSC 96-2416-H-230-005 ).
PY - 2011/12
Y1 - 2011/12
N2 - Although previous studies on international diversification are plentiful, they mainly focus on the effect of international diversification on overall firm performance, and the results are mixed. This study extends this line of research and explores the impact of international diversification on new product performance. Specifically, we ask if international diversification explains the stock market reactions to new product introduction (NPI) announcements. We find an inverted-U-shaped relationship between international diversification and the announcement returns of NPIs, revealing that the market value of NPIs initially improves and then declines with increasing international diversification. The results also show that intangible assets, such as technological and marketing capabilities, positively moderate the relationship between international diversification and the market value of NPIs. Our study not only highlights the importance of considering both sides of international diversification in affecting investors' assessments of corporate new product strategies, but also shows the possibility of internal capabilities in changing the fixed relationship between international diversification and the market value of new products.
AB - Although previous studies on international diversification are plentiful, they mainly focus on the effect of international diversification on overall firm performance, and the results are mixed. This study extends this line of research and explores the impact of international diversification on new product performance. Specifically, we ask if international diversification explains the stock market reactions to new product introduction (NPI) announcements. We find an inverted-U-shaped relationship between international diversification and the announcement returns of NPIs, revealing that the market value of NPIs initially improves and then declines with increasing international diversification. The results also show that intangible assets, such as technological and marketing capabilities, positively moderate the relationship between international diversification and the market value of NPIs. Our study not only highlights the importance of considering both sides of international diversification in affecting investors' assessments of corporate new product strategies, but also shows the possibility of internal capabilities in changing the fixed relationship between international diversification and the market value of new products.
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U2 - 10.1016/j.intman.2011.03.002
DO - 10.1016/j.intman.2011.03.002
M3 - Article
AN - SCOPUS:81155128616
VL - 17
SP - 333
EP - 347
JO - Journal of International Management
JF - Journal of International Management
SN - 1075-4253
IS - 4
ER -