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- W2615031942 abstract "Purpose Literature indicates that global geographic diversification (GD) has mixed effects on a multinational corporation’s (MNC) performances. The purpose of this paper is to examine how an MNC’s GD influences its stock market and financial performances directly and indirectly via operational performance (i.e. changes in inventory levels). Design/methodology/approach Using firm-level data collected from Compustat database for the period 2000-2011 and estimating a mediating regression model, the authors examine the direct and indirect effects of GD on an MNC’s stock market (Tobin’s q ) and financial performances (ROA), with inventory level being a mediator. Additionally, the examination is implemented separately under two economic situations: financial crisis vs without financial crisis. Findings The results show that GD enhances an MNC’s stock market performance, while deteriorating its financial performance in the presence of a financial crisis. In contrast, GD has little direct impact on an MNC’s stock market and financial performances during periods without financial crisis. The indirect effects of GD are mediated by changes in inventory levels. Practical implications This study suggests that MNCs need to carefully weigh the benefits and costs of global strategy obtained through GD. The results also indicate that GD is highly appreciated by the stock market investors during economic downturns and tighter inventory management may further enhance firm values. Originality/value This paper is the first empirical research to estimate both direct and indirect effects of GD via inventory in the operations management literature, highlighting the value of GD depending on the different economic situations and echoing the role of operations in implementing GD." @default.
- W2615031942 created "2017-05-26" @default.
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- W2615031942 date "2017-07-03" @default.
- W2615031942 modified "2023-09-27" @default.
- W2615031942 title "An empirical examination of the direct and indirect effects of geographic diversification on stock market and financial performances of multinational corporations" @default.
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- W2615031942 doi "https://doi.org/10.1108/ijpdlm-01-2017-0015" @default.
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