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The moderating effects of a board of directors on FDI’s international diversification in Turkey

Kader Şahin (Department of Business Administration, Karadeniz Technical University - FEAS Trabzon, Turkey)
Seyfettin Artan (Department of Economics, Karadeniz Technical University - FEAS, Trabzon, Turkey)
Seda Tuysuz (Atatürk University - FEASS, Erzurum, Turkey)

International Journal of Organizational Analysis

ISSN: 1934-8835

Article publication date: 9 March 2015




This paper aims to investigate the moderating effects of a board of directors on foreign direct investment (FDI)’s international diversification in Turkey.


A sample of Turkish multinational firms with FDI was used. Two different aspects of international diversification were considered: the relationship between international diversification and financial performance and the moderating effect of board composition on the relationship between international diversification and the firm’s financial performance. Firm-level data were obtained from the Istanbul Stock Exchange in Turkey.


The findings reveal that international diversification leads to better financial performance according to market-based measures. On the other hand, this study indicates that the board characteristics have a moderating effect on international diversification and financial performance.

Research limitations/implications

The study is based on a sample of publicly listed firms in Turkey, and this restriction limits the generalizability of the findings.

Practical implications

The internalization efforts of Turkish FDI have led to better financial performance in terms of market-based measures. The results have stated that the interest of independent outside directors is aligned with lower-risk investment decisions. Independence of independent outside directors in Turkey is interrogated by practitioners or the Capital Markets Board of Turkey. The larger board size which a moderator variable is provided, the wider shareholder value in Turkey is.

Social implications

One can understand that the development of market-supporting institutions provides the support for entry to an emerging economy which is inefficient or incomplete markets and highly concentrated family ownership.


These findings provide important implications for corporate governance and highlight the need for further research on the role of governance in firm internationalization. This study not only helps to understand how board characteristics affect the choice of international diversification decisions, but the results also allow to assess the performance implications of these choices for a particular period.



The authors thank four anonymous reviewers for their valuable suggestions related to the revision of the manuscript. Thanks are also due to Peter Stokes for providing support to the authors.


Şahin, K., Artan, S. and Tuysuz, S. (2015), "The moderating effects of a board of directors on FDI’s international diversification in Turkey", International Journal of Organizational Analysis, Vol. 23 No. 1, pp. 61-88.



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Copyright © 2015, Emerald Group Publishing Limited

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