Corporate International Diversification and Firm Performance: Evidence from Chinese and Russian Companies

During the last decades, international diversification became of the main firms’ growth strategies. We study the problem of impact of international diversification on firms’ performance towards 3 most popular directions: form of relationship between degree of internationalization and forms performance; choice of a relevant measure of DOI and impact of product diversification on the relationship between international diversification and performance indicators. In current study, most actual methods of measuring performance are implemented, particularly we use a new economic profit based approach, which incorporates both operational and financial components of performance. After performing the regression analysis, we observe the following results. First of all we reject the U-shaped relationship between degree of internationalization and performance for our sample. Secondly, the question of choosing the theoretically reasonable measure of DOI for our sample is still actual, as we reject the hypothesis of similarity of results from different variables (FSTS, Entropy and HHI). And finally, on this sample product diversification has no significant effect on the DOI-performance relationship.