Intra- and inter-regional expansion: a nonlinear model

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.

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