Diversification and internationalization with performance: Evidence from Chinese listed firms

Diversification and internalization have been key corporate strategies for growth. However, empirical studies of the effects of corporate diversification and internationalization on performance are not conclusive. This study empirically examines the relationships of financial performance with product diversification, internationalization and their interaction through multivariate regressions techniques of data from 76 Chinese listed firms for the period 2002-2004. The results indicate that diversification has a negative impact on firm performance, while internationalization has no significant effect on performance, the concurrent combination of diversification and internalization are prone to produce mediocre financial results and there is no evidence to prove the non-linear relationship between diversification and internalization and corporate performance.