Intra-regional sales, product diversity, and the performance of merchandising multinationals

Abstract

This study examines the relationship between intra-regional sales, product diversity, and performance of 45 merchandising firms using data from 1997 to 2003. The interaction effects between product diversity and intra-regional sales on performance are explored, using a curvilinear relationship. The analysis integrates three main theories, namely the resource-based view, transaction costs, and organization learning theory. The models measuring a firm's performance by return on assets (ROA) and return on sales (ROS) show that at high levels of intra-regional sales, small levels of product diversity can generate greater return to a firm but high levels of product diversity may hurt a firm's performance. Higher levels of intra-regional sales tend to improve a firm's performance and enhance the impact of product diversity on performance.

The international performance of standardizing and customizing Spanish firms

“…Performance. We use return on sales (ROS) as the indicator of firm's performance because it is one of the most common metrics to measure the global economic output (Contractor et al, 2003;Delios et al, 2008;Qian et al, 2008;Rugman and Oh, 2010;Ruigrok and Wagner, 2003;Sukpanich and Rugman, 2007;Tallman and Li, 1996) and scale. Independent variables.…”

Regional and product diversification and the performance of retail multinationals

“…Assaf et al (2012) found a U-shaped relationship for 43 large supermarket chains. Using a regional MNE perspective, Sukpanich and Rugman (2007) and Mohr et al (2014) provided evidence of the performance superiority of home-region orientation for retail firms. Li (2005) found that a home-region strategy provided better performance outcomes for U.S. MNEs in various services industry sectors, but his study excluded retail and food service sectors.…”

“…Tallman and Li (1996) developed a theoretical framework that suggested that the similarities of geographic and product diversifications propose potential interaction effects that may impact a firm's performance. Accordingly, several studies have investigated the interactions between geographic and product diversifications (e.g., Tallman and Li, 1996;Hitt et al, 1997;Geringer et al, 2000;Sukpanich and Rugman, 2007;Contractor, 2012, 2014). While the results from these studies are inconsistent, a study by Sukpanich and Rugman (2007), which is closely related to this paper, found that higher levels of home-region sales enhanced the positive impact of product diversity on the performance of large merchandisers.…”

“…Accordingly, several studies have investigated the interactions between geographic and product diversifications (e.g., Tallman and Li, 1996;Hitt et al, 1997;Geringer et al, 2000;Sukpanich and Rugman, 2007;Contractor, 2012, 2014). While the results from these studies are inconsistent, a study by Sukpanich and Rugman (2007), which is closely related to this paper, found that higher levels of home-region sales enhanced the positive impact of product diversity on the performance of large merchandisers. Keep et al (1995) argued that, in the retail sector, product diversification indicated a retail firm's diversification across its retail formats.…”

A patent-based study of the relationships among technological portfolio, ambidextrous innovation, and firm performance

“…The logarithm of sales per employee is a widely used measure of OP and is adopted in this study in order to enhance comparability with prior work (Huselid 1995). Based on Sukpanich and Rugman's (2007) approach, we measured MA by the selling and general administrative expenses as a proportion of total sales. In addition, a firm's corporate strategy is inevitably influenced by its PP, and Tobin's Q t−1 is Downloaded by [Simon Fraser University] at 22:40 05 October 2015 used as a proxy of this to control for its potential effects.…”