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This paper aims to derive and estimate a theory-based empirical specification that models a firm’s choices of its international diversification (ID) and product diversification (PD) and how they evolve over time in response to shocks that alter the relative cost and relative profitability of ID and PD.

We use longitudinal data on U.S. manufacturing firms from 1984 to 1999, a period of intense shocks associated with rapid globalization, to estimate a dynamic panel data Tobit model that permits lags in a firm’s adjustment to its optimal mix of ID and PD over time.

We find strong support for the theoretical framework underlying our empirical specifications and posited dynamics, with full adjustment estimated to require, on average, 1.5 years, a finding with implications for the time spacing of observations in empirical studies of ID and PD to avoid biased inferences. Among the globalization shocks during the time period studied, our results indicate that global competitive pressures and efficiency gains from global supply integration to be the more important factors driving U.S. firms toward greater ID relative to PD. Augmentation of firms’ organizational (managerial) and physical capital resources is also found to be important for supporting an expansion of ID relative to PD. Technological resource augmentation is instead found to favor expansion of PD relative to ID.

Our empirical specification is novel. It readily incorporates an often ignored but necessary theoretical condition that defines a firm’s optimal choices of its ID and PD, and it allows observed choices at a point in time to deviate from their optimal values.

This paper shows how European market integration can provide a better environment for European firms and promote the creation of stronger competitive advantages. The first part focuses on how European market integration changes the competitive process and influences both the corporate strategies and the internal organization of European firms. The second part deals with the ways in which the adjustment of corporate strategies influences restructuring within European industries through mergers, acquisitions, and cooperation agreements between firms. The last part compares empirical findings regarding mergers, acquisitions, and cooperative agreements with the theoretical arguments developed in the first two parts of the paper.

The paper proposes a new research design and framework to analyze the pattern of competition in the global market. Using revealed measures of comparative advantage and firm-specific advantages the competitive position of EU manufacturing industries is analyzed in relation to the structural characteristics of the industries. The framework is applied to examine the pattern of international alliances formed in the EU during the 1980s. In addition to shedding new light on the competitive position of European firms, the study offers some new perspectives for further research.

The purpose of this paper is to develop a new method that allows corporate strategists to scan for profitable growth opportunities by extending the firm's product offering to new (foreign) markets.

The methodology consists of developing and applying a new conceptual framework – MATCH – which assesses the potential value creation in relation to the business model adaptations that need to be made to enter a new market.

The paper shows that traditional methods of calculating the attractiveness of new markets may be misleading if not all elements of the business model are aligned with the contextual conditions (institutional, economic, social.) prevailing in the new market.

The method is illustrated for entering new foreign markets but lends itself to wider applications in the area of product diversification.

Without asking for extensive data collection, the method yields practical insights about the attractiveness of entering new markets and business model adaptations that need to be made.

The MATCH framework is an original and practical approach that builds upon and extends essential insights originating from the related diversification literature.

We examine the determinants of multinational firms’ propensity to conduct R&D activities in host countries, with specific attention to the influence of host countries’ university research. We consider heterogeneous locational drivers related to the type of R&D activity: basic research, applied research, development for local markets, and development for global markets. Drawing on official survey data on R&D activities by 498 Japanese multinational firms in 24 host countries and estimating two-stage models, we find that the likelihood that firms conduct R&D in a host country is generally increasing in the strength of university research. Conditional on a firm’s R&D presence, university research strength is associated with a greater propensity to conduct (basic) research activities rather than (local) development, while the intensity of host country university–industry collaboration is most strongly associated with applied research. Host country experience and the depth of the firm’s manufacturing presence are also associated higher propensities to engage in research.