Abstract

Wei-Hwa Pan1, Wei-Chun Tsai2* and Tsung-Yen Kuo1

Previous studies provided mixed results on the impact of internationalization on firm performance. We argue that internationalization can be classified into two geographic dimensions: Country and regional diversification. This paper examines the configuration effect of country and regional diversification on firm performance. Using longitudinal data containing firm-level operation information during 2002-2005, the empirical investigation indicates that an inverted U-shaped relationship exists between regional diversification and performance. The study also finds that regional diversification has a moderating effect on the relationship between country diversification and firm performance. The results indicate that geographic configurations affect performance. For a lower level of regional diversification, a lower level of country diversification results in enhanced performance.