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Intra- and inter-regional expansion: a nonlinear model

Hua Zhang (Department of Finance, The Chinese University of Hong Kong, Hong Kong)
Gongming Qian (Department of Management, The Chinese University of Hong Kong, Hong Kong)
Lee Li (School of Administrative Studies, York University, Toronto, Canada)
Zhengming Qian (School of Mathematical Science, Guizhou Normal University, Guiyang, China)

Management Decision

ISSN: 0025-1747

Article publication date: 9 November 2018

Issue publication date: 5 July 2019

Abstract

Purpose

The purpose of this paper is to differentiate between intra- and inter-regional diversification and explore how each affects firm performance. Existing studies show that both intra- and inter-regional expansion provide benefits and incur costs but the findings are mixed. This study aims to explain the mixed findings.

Design/methodology/approach

This study uses secondary data and quantitative methodologies to test hypotheses.

Findings

Using data from 663 Canadian firms over a six-year period (2006–2011), the authors find that the relationship between firm performance and the depth and width of intra-regional expansion is nonlinear. The authors also find a sigmoid-shaped relationship between firm performance and inter-regional diversification, i.e., performance initially increases with home regional diversification, decreases with bi-regional diversification and finally increases again with multi-regional diversification.

Originality/value

The findings of this study shed light on the current debate on the merits of inter- and intra-regional diversification and have important theoretical and managerial implications.

Keywords

Citation

Zhang, H., Qian, G., Li, L. and Qian, Z. (2019), "Intra- and inter-regional expansion: a nonlinear model", Management Decision, Vol. 57 No. 7, pp. 1554-1566. https://doi.org/10.1108/MD-04-2017-0359

Publisher

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Emerald Publishing Limited

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