“…Moreover, we consider the joint effect of product and geographic diversification on subsidiary performance. Although the two types of diversification share many similarities, such as benefits from economies of scale and scope, extension of core competencies, market power, and growth opportunities, as well as accesses to foreign knowledge, resources, and institutions (Hilman, 2015; Hitt et al, 1997; Hitt et al, 2006), the two types of diversification strategies may affect subsidiary performance through different mechanisms. When an MNE is also geographically diversified, according to Kogut's (1985) study on operating flexibility, being active in multiple countries enables the firm to engage in arbitrage by shifting activities from one country to another.…”