infonet-economy

Previous research found mixed empirical results of the international diversification-performance relationship (i.e., S-shaped and inverted U-shaped). Our study develops a theoretical framework to address this inconsistency in the literature. Specifically, we propose that multinational enterprises' (MNEs) ownership structure (i.e., public vs. private) moderates the effect of international diversification on firm performance. Since previous research found that the possession of certain assets, such as financial and human capital, might be driving superior international performance, we propose that public MNEs may be able to outperform private MNEs, especially at higher levels of international diversification, because of their superior access to financial capital markets and experienced top managers.