| Summary: | 博士 === 國立臺灣大學 === 商學研究所 === 88 === “In search of sustainable excellence” has continuously been the critical concern to both academicians and managers. To strengthen its competitive advantages, a corporation could choose to grow within existing operations or diversify into related or unrelated businesses. A company could also opt for expanding across borders to create new market spaces to ensure its continuing success.
Performance effects of product-market expansion choices have long been of central interest in both strategic management and international business fields. For the past decade, the study on the interactive effects from product diversification and international expansion strategies upon a firm’s performance have been an emerging research stream, while no consistent results have been found (cf. Geringer, Beamish & daCosta, 1989).
To examine the dynamism between strategies further, this study also traces retrospectively the evolution of the companies to find out the order of strategies implemented. As to choices between two strategies, main factors such as top management’s orientation and strategic intent, corporate resources and capabilities, expected risk and return from strategies executed, and competition intensity within an industry are further investigated.
To implement dual strategies, multinational companies (MNCs) should leverage their limited resources and core competency across businesses and borders to gain economies of scale, scope and learning. These benefits are not captured without penalties, however. MNCs also encounter transaction costs resulting either from market or from hierarchy while various strategies are pursued at the same time. For a transnational CEO attempting to achieve a strategy combination which results in optimal worldwide performance is still the most challenging task in the future.
Summarizing theoretical and practical developments, the conceptual framework of this study is organized into 3 parts: (1) the growth path choice (i.e., product or market option first)；(2) product diversification effects on corporate performance；(3) international expansion effects on performance. From this framework, 10 hypotheses are proposed for later test. And three sets of performance measures (1996-98 averaged) are used: (1) profitability, (2) the stability in profitability, and (3) risk-adjusted returns.
Empirically, the interactive effects from dual strategies of product diversification and international expansion on corporate performance were examined using a sample of 118 Taiwan’s information and electronics firms which are most diversified both on business and on geographical dimensions. Five in-depth case studies from different sectors along the value-added chain of information product manufacturing are also provided to cross-validate findings from statistical analysis.
Research findings include the following: (1) The four factors influencing the choice of growth paths for companies are confirmed. (2) Product diversification is negatively related to the objective performance index; however, a firm’s scale is the major factor contributing to the performance variance. Moreover, related and un-related diversified firms show no significant difference in both objective and subjective performance indices. (3) The degree of internationalization is found to be significantly and negatively related to the risk-adjusted return on assets. The relations between the degrees of either international market diversity or heterogeneity and the risk-adjusted return on assets are non-linear but not significant. And the main factor accounting for the performance variances among firms is their numbers of employees.
Owing to the limited domestic market, most Taiwanese firms, focusing on one specialized business, tend to adopt market expansion across countries via export (mostly with strategic allies) at their early stages. By accumulating resources and capabilities from international expansion, they gradually build their own competency and then successfully compete against rivals from other developing countries in later years. Deliberately choosing international expansion first to create critical mass effects and then adopting product diversification that meets market requirements to reinforce their competitive advantages, information and electronic firms from Taiwan have maintained the No. 3 position in computer industries in the world, even after the Asian economic turmoil.
Compared with previous studies, this study clarifies the related concepts of international expansion, explores the interactive relations between product diversification and international expansion, verifies the relations between strategic interactions and firms’ performances, and develops an initial integrated framework covering the causes of product-market strategy choices and the resulting performance consequences. Nevertheless, this research adopts only three-year averages of performance indices, does not take into account the dynamic aspect of competition and chooses only large and medium-sized information and electronics firms as validated samples. Topics such as the causes for the existence of internalized un-related firms, product diversification and the timing of foreign market entry, the fit between product and international expansion strategies, the interactions between product and market diversification strategies in a conglomerate, the relation between choice of product-international diversifications and alliance strategies, and strategic inflection and business restructuring for a multinational are suggested for future studies. Through further interdisciplinary studies of strategic management and international business, a more comprehensively integrated framework for transnational management will be built.
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