Gary R. Carini

The Impact of Internationalization on the Diversification-Performance Relationship: A Replication and Extension of Prior Research

Abstract Most strategic management researchers defend related diversification as yielding superior performance vis-a-vis unrelated strategies. However, empirical results on this subject have sometimes been inconsistent with this position, prompting a search for moderating conditions. Based on a theory of international impediments to synergy formation, we attempted to replicate Bettis and Halls (1982) findings using a sample of predominantly domestic Fortune 500 firms. We divided these firms into two groups—product-related ( n = 23) and unrelated ( n = 47) corporations—and assessed group differences in performance (5-year average return on assets (ROA) spanning 1985–1989) and risk (the standard deviation of ROA over the same time frame). Parallel to Bettis and Hall, we found that differences in ROA were significant (F[1,69] = 4.99, p Bettis and Halls (1982) study, we tested a more inclusive model across a sample of firms, including multinationals. This expanded diversification–performance model was based on a sample including multinational firms from the Fortune 500, separating these again into product-related ( n = 78) and unrelated ( n = 83) concerns. After including control variables (firm size, debt, and global relatedness/unrelatedness) as covariates in the model, we used a multivariate analysis of variance (MANCOVA) test to look for differences in accounting (ROA and return on sales (ROS)) and market (market-to-book value) returns, and accounting (standard deviation of ROA and ROS) and market (systematic, unsystematic, and total) risk. In this test, group differences were not significant (multivariate F[8,146] = 1.654, ns), although size and debt emerged as significant covariates. Taken together, these findings support the international impediments theory, showing that although domestic product-related firms may outperform unrelated diversifiers, these differences do not seem to generalize to multinationals. Despite recent criticisms, our findings suggest that the relatedness synergy framework may yet apply, although only for domestic firms. We recognize the limitations of our study; however, the conclusions of this research are more important than ever, because American firms are internationalizing their operations at an increasing rate.

East vs West: Strategic management perspectives from formal logic and the logic of contradiction

Abstract Strategy at the Leading Edge features short reports on conferences, new research and experiments by academics, organizations and consuitaricles for all those involved in strategy and strategic management. Contributions (two hard copies and a dick) should be sent to Martin Whitchill, City University Business School, Frobisher Cresent, Barbican Centre, London

Posturing your firm for the future: considering environmental uncertainty and managerial sentiment

Purpose All leaders must position their firms for future success. However, not all firms should search for information and craft their strategies in the same way. This paper aims to provide a framework, which suggests that firms should adopt different postures depending on extent of environmental uncertainty and whether leaders are optimistic or pessimistic about their firms’ abilities and futures. Design/methodology/approach This framework was designed by two strategy professors based on both strategy theory and their experience working with and observing firms over many years. Findings The framework’s four postures – versatile (high uncertainty, positive sentiment), inquisitive (high uncertainty, negative sentiment), focused (low uncertainty, positive sentiment), and vigilant (low uncertainty, negative sentiment) – call for different behavior as firms seek to understand environmental trends and take strategic actions. The dangers of each posture are briefly discussed. Originality/value This paper provides a simple framework to help executives better understand how their firms should search for and implement strategic actions for future success.