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Business relatedness is important in international diversification because it enables a firm’s transfer of resources to business units operating in foreign markets. The purpose of this paper is to develop a conceptual model based on a review of the major contributions of studies regarding the relatedness of subsidiaries, joint ventures or any other foreign unit.

The paper examines theory bases, the relatedness construct, data issues and the key achievements of previous studies. Drawing on organizational learning, transaction costs economics and industrial organization, a conceptual model and propositions are developed that intend to close important research gaps.

The model includes competitive strategy as a mediator of the effects of relatedness on foreign unit performance, type of foreign unit – that is, a wholly owned unit or joint venture – as a moderator; and competition barriers as a moderator.

In future research, the propositions need to be transformed into testable hypotheses. It is recommended to treat relatedness as a multidimensional concept.

A firm is primarily advised to evaluate how its relatedness with foreign units enables knowledge transfer. A foreign cost leadership strategy benefits from product relatedness, while a differentiation strategy calls for resource relatedness.

The proposed model is unique as it includes an actionable component that mediates the effects of relatedness on international performance, i.e. competitive strategy, and concerns both wholly owned foreign units and international joint ventures.

Responding in a timely manner to product recalls emanating from the supply chain presents tremendous challenges for most firms. The source might be a supplier from the same industry located next door, or one from a completely different sector of the economy situated thousands of miles away. Yet the speed of the firm’s response is crucial to mitigating the consequences of the recall both for the firm, and consumer health and well-being. The purpose of this paper is to investigate the effects of geographic distance, industry relatedness and clustering on firm response time to a supplier-initiated product recall.

The authors test the theoretical framework via an examination of food recall announcements registered with the US Food and Drug Administration over a ten-year period. The authors develop a data set comprising 407 pairs of supplier and affected downstream manufacturing firms, and utilize cross-classified hierarchical linear modeling to understand the drivers of organizational responsiveness.

The results suggest that firm response time is lengthened by geographic distance but reduced when the supplier and affected firm operate in related industry sectors. The authors further find that as more firms in a given industry are affected by the same recall, response time deteriorates.

Product recalls in the agri-food industry are significant events initiated to protect consumer health and ensure the safety of the farm-to-fork food chain. The findings highlight how both geographic- and industry-related factors determine the speed of firm responsiveness to these events.

The purpose of this paper is to examine the impact of related diversification across service offerings and industry domains for professional service firms (PSFs) in emerging economies by integrating the reputational and economies of scope perspectives of diversification. The paper also provides insights into how related diversification impacts small and medium sized firms differently.

Using unique data from the Indian Information Technology industry, the authors examine the impact of related diversification along service offerings and industry domains on export performance of firms.

The results show that related diversification across specializations and industry domains impact performance differently across different firm sizes. While the authors find that related diversification across service offerings has an inverted U shape with performance for the medium sized firms, they do not impact performance for small sized firms. Performance of small firms has a U shaped relationship with relatedness in industry domains. The study shows that reputation transfer across industry domains play a significant role in the performance of small size firms whereas the ability to realize economies of scope by cross selling multiple services across clients do matter for performance of medium sized firms.

Managers of small PSFs need to expand along related industry domains whereas managers from medium sized firms can experiment across service offerings to exploit economies of scope.

The study contributes to hitherto unexamined research on related diversification in PSFs. The study is one of the few studies to examine relatedness along more than one dimension in an intra-industry context.

This study investigates the extent to which structural equivalence between acquiring and target firms is associated with post-merger and acquisition (M&A) performance—a relationship that is proposed to be moderated by industry-level vertical relatedness between acquiring and target firms.

Applying social network analysis and regression, this study analyzes a buyer–supplier relationship network dataset of 279 M&A deals completed between 2010 and 2017 to test the hypotheses. Structural equivalence is measured as the proportion of common customers and suppliers between an acquiring firm and a target firm.

Supporting a view about the importance of supply chains in explaining M&As outcomes, the results suggest that the structural equivalence in the supplier network is positively associated with post-M&A firm performance. The results also show that the effect of the structural equivalence in the customer network is moderated by vertical relatedness between two merging firms (i.e. structural equivalence contributes to post-M&A performance when vertical industry relatedness is high).

This study contributes to the M&A and supply network literature by investigating the performance implications of structural equivalence in supplier and customer networks, demonstrating the importance of taking a supply chain view when explaining M&As outcomes. Specifically, the authors suggest considering structural equivalence as a new type of relatedness between merging firms (i.e. relatedness in network resources in explaining post-M&A performance). It also indicates how industry-level vertical resource relatedness, which is about relatedness in internal resources between the two firms, could interact with firm-level network resource relatedness, which is about relatedness in external supply chain resources between the two firms, in affecting post-M&A performance.

This study analyzes whether industry relatedness between a corporate borrower and its group peers significantly affects that firm's borrowing cost.

A regression analysis is run on bank-loan data of a sample of Indonesian companies for 2010–2020. The main variables of interest are the natural logarithms of the borrowing firm's number of affiliates classified within either similar 2- or 4-digit GICS industries, and the Caves weighted index of these firms' related diversification. This index measures how firms in a group are diversified in relation to the borrower. The dependent variable is the all-in credit spread, stated in basis points, over the LIBOR or similar benchmark, as of the loan issuance date.

Findings support the industry-relatedness hypothesis and contradict the risk-reduction hypothesis and show that banks charge lower loan spreads on a borrowing firm that either operates within a similar industry as its affiliate or diversifies into related sectors or industries. Consistent with the co-insurance-effect hypothesis, the results also underline the importance of the parent and first-layer firms as supporting instead of the tunneling vehicles within business groups. These conclusions hold even after segregating the sample and using the loan maturity as the dependent variable.

This study uses a unique diversification measurement based on the borrowing firm's sector or industry, relative to other group members, and offers new insights on business group diversification and bank loan costs.

The linkage between diversification and performance has puzzled scholars for decades. A vast amount of empirical studies, together with the help of meta-analyses condensing diverse results, established a widely shared understanding that related diversification leads to superior firm performance. The main rationale for this finding is that relatedness within a company’s portfolio of businesses allows the company to achieve synergies by sharing or transferring resources. Although the predominant importance of related diversification seems generally accepted, scholars raise severe concerns about our ability to precisely define and measure relatedness. In most studies, traditional measures of diversification such as the Berry index are used, which assess relatedness from a product/market perspective. However, these measures face strong criticisms for their low degree of content validity. So if we doubt our understanding of relatedness, how can we agree on the performance effect of related diversification? To reassure our understanding of the diversification-performance linkage, this study critically reflects upon the underlying phenomenon of relatedness. By compiling and evaluating the different perspectives of relatedness with their heterogeneous conceptualizations and measures, this study supports the view that the multi-facetted nature of relatedness can only be captured inadequately so far. Moreover, most prior work mainly focuses on synergy potential rather than on the realization of synergies, thereby neglecting a mechanism that may have an important bearing on the performance effects of diversification.

The purpose of this paper is to empirically investigate the effect of rural finance on industrial integration of rural primary, secondary and tertiary industries.

Using household-level data collected by Third National Agricultural Census and the provincial-level data collected from Wind database, the authors estimated the impacts of rural finance on rural industrial integration using Logit and Probit regression models. Further, the authors examined how the effect of rural finance varies with the age and education of householders, and with household and provincial characteristics by investigating the moderating effect.

The findings show that rural finance has a significant and positive effect on promoting farmers’ participation in new agricultural management organizations. This effect is more obvious in families whose householders are 40–50 years old, or families that have more educated members. This is because the middle-aged or educated people are more willing to accept and take part in industrial integration. The results further indicate that rural finance has a greater effect on industrial integration in provinces with a high degree of marketization, and in provinces with the high output value of industries and services in agricultural intermediate input.

The authors investigated the impact of rural finance on rural industrial integration empirically, and this topic is rarely covered before. The findings of this study also enrich the literature on financial development and economic growth as well as provide policy suggestions on how to promote rural industrial integration.

While the strategic management literature suggests that related diversification is superior to unrelated diversification, there is little evidence that acquirers benefit from pursuing related targets. We argue that the empirical literature is plagued by poor measures of relatedness. Moreover, many empirical studies do not control adequately for the characteristics of the market for corporate control. We argue that not only value creation, but also value appropriation, depend on the relatedness of acquirer and target. Using an improved measure of relatedness, we provide empirical evidence that acquirer returns are positively and significantly correlated with relatedness.

The purpose of this paper is to complement the conventional international business (IB) theory, the OLI perspective, which is good at explaining the foreign direct investments (FDIs) undertaken by developed market multinational corporations (DMNCs). This study also suggests a new theoretical framework, namely, the OILL paradigm, that is able to encompass FDIs from emerging market multinational corporations (EMNCs) toward developed economies.

The data comprising 206 Chinese MNCs, which completed international mergers and acquisitions (IMAs), were obtained from Zephyr. By using these data, logical regressions are conducted to statistically confirm that we should not omit the learning motivation if we want to adequately understand the FDI phenomenon by encompassing investment flow from developing (or emerging) to developed countries.

The results based on this data set indicate that EMNCs often try to enter developed economies with the motivation to seek sophisticated foreign host knowledge that is not available internally. In particular, they tend to use IMA strategies when they want to learn from heterogeneity (i.e. inter-industry mergers and acquisitions) and absorb advanced technologies from DMNCs.

By shedding light on the recent new trend in FDI (i.e. FDI from emerging countries to developed economies), the study provides useful theoretical implications, as well as suggesting scholarly contributions. However, we should acknowledge that there are some limitations to this study. First, the study explores only Chinese MNCs. Second, learning motivations need to be minutely and precisely measured by other studies. Third, this study argues that FDI from EMNCs to DMNCs is triggered by the former’s motivation concerning knowledge acquisition. However, the type of knowledge should be considered, and this is perhaps another avenue for future research.

Conventional IB theories, such as the OLI paradigm and internalization theory, have long sought to answer the question of why DMNCs go for foreign markets, in spite of the presence of the liabilities of foreignness, and focused on their main investment motivations (i.e. market-seeking, efficiency-seeking and resource-seeking motivations). For this reason, these theories do not adequately capture the primary FDI motivations of EMNCs, and consequently, they are unable to see the big picture when it comes to the FDI phenomenon. Based on this idea, the authors complement the well-known triad motivations (i.e. market-seeking, efficiency-seeking and resource-seeking motivations) by adding the knowledge-seeking motive and contribute to the evolution of IB theories by suggesting a new theory, which is the OILL paradigm.

The study contributes to the extant literature in the field of IB in two key ways. First, it examines EMNCs’ central motivations in conducting FDI where empirical research is sparse. By doing this, this paper attempts to solve the query indicated above (i.e. why MNCs choose FDI in spite of the presence of the liabilities of foreignness), and it offers a new theory (i.e. the OILL paradigm).

To test the economic theory that economies with greater stability and diversity are also economies that are more insulated from economic shocks.

Uses persistence profiles derived from the cointegrated systems of two regional economies within the state of Oregon; the urban Portland Metropolitan Area (PMA) and the rural Southwest (SW) region.

The results of the above process illustrate that the more stable and diverse PMA responds with a smaller frequency and returns to equilibrium more quickly than the SW.

This paper only provides one set of observations, which is insufficient to prove the theory, but does enable a more extensive time series approach than that has been done previously. Also regional economies typically become more diversified over time, so the level of diversity can only be measured in relative terms not absolute.

The paper reveals the benefits a diversified a diversified economy has in creating stable employment opportunities, as deviations in unemployment rates decline as diversification increases.

The paper takes a widely accepted time series econometrics technique from macroeconomic literature, cointegration, and applies it at a regional level. Cointegration combined with persistence profiles enables the integration of both the time dynamics of an economy and their inter‐industry linkages to be analyzed. This methodology dramatically increases the depth of possible analysis into the stability/diversity debate that has been waged over the last 70 years.