Friday, August 21, 2020

International Diversification and the Market Value of New Product

Diary of International Management 17 (2011) 333â€347 Contents records accessible at ScienceDirect Journal of International Management International diversi? cation and the market estimation of new item presentation Chi-Feng Wang a,1, Li-Yu Chen b,? , Shao-Chi Chang c,2 a b c Department of Business Administration, National Yunlin University of Science and Technology, Taiwan Department of Management, Fo Guang University, Taiwan Institute of International Business, National Cheng Kung University, Taiwan article information Article history: Received 11 January 2011Received in reconsidered structure 31 March 2011 Accepted 31 March 2011 Available online 2 May 2011 Keywords: International diversi? cation New item presentation Technological capacity Marketing ability Event study theoretical Although past investigations on global expansion are abundant, they for the most part center around the impact of universal broadening on generally speaking firm execution, and the outcomes are blended . This investigation expands this line of research and investigates the effect of global expansion on new item performance.Specifically, we inquire as to whether universal broadening clarifies the financial exchange responses to new item presentation (NPI) declarations. We locate an upset U-molded connection between universal enhancement and the declaration returns of NPIs, uncovering that the market estimation of NPIs at first improves and afterward decreases with expanding global expansion. The outcomes additionally show that elusive resources, for example, innovative and promoting capacities, decidedly moderate the connection between universal enhancement and the market estimation of NPIs.Our study not just features the significance of thinking about the two sides of global expansion in influencing financial specialists' evaluations of corporate new item procedures, yet in addition shows the chance of interior abilities in changing the fixed connection between worldwide broadenin g and the market estimation of new items.  © 2011 Elsevier Inc. All rights held. 1. Acquaintance According with the hypothesis of remote direct speculation (FDI) (Caves, 1996; Dunning, 1988; Hymer, 1976) and portfolio hypothesis (Jacquillat and Solnik, 1978; Lessard, 1973, 1976; Solnik, 1974), global diversi? ation will prompt higher ? rm esteem. In any case, existing examinations looking at the effect of global diversi? cation on ? rm execution have yielded uncertain outcomes. The outcomes on the connection between worldwide diversi? cation and ? rm execution has been seen as positive (Delios and Beamish, 1999; Grant, 1987; Rugman et al. , 2008), negative (Collins, 1990; Zaheer and Mosakowski, 1997), U-molded (Capar and Kotabe, 2003; Gaur and Kumar, 2009; Lu and Beamish, 2001), reversed U-formed (Brock et al. , 2006; Garbe and Richter, 2009; Gomes and Ramaswamy, 1999; Hitt et al. 1997) and flat S-molded (Contractor et al. , 2003; Lu and Beamish, 2004; Ruigrok et al. , 2007). To m ore readily comprehend the in? uence of universal diversi? cation, we broaden this line of research by considering the effect of global diversi? cation on new item execution. Speci? cally, we test if worldwide diversi? cation clarifies the stock ? Comparing creator at: Present location: Department of Management, Fo Guang University, No. 160, Linwei Rd. , Jiaosi, Yilan County 26247, Taiwan. Tel. : + 886 3 9871000 23816. Email addresses: [emailâ protected] net. tw (C. - F. Wang), [emailâ protected] fgu. edu. w (L. - Y. Chen), [emailâ protected] ncku. edu. tw (S. - C. Chang). 1 Present location: Department of Business Administration, National Yunlin University of Science and Technology, No. 123, University Road, Section 3, Douliou, Yunlin 64002, Taiwan. Tel. : + 886 5 5342601ãâ€"5245. 2 Present location: Institute of International Business, National Cheng Kung University, No. 1, University Road, 701, Tainan, Taiwan. Tel. : + 886 6 2757575ãâ€"53506. 1075-4253/$ †see front issu e  © 2011 Elsevier Inc. All rights saved. doi:10. 1016/j. intman. 2011. 03. 002 334 C. - F. Wang et al. /Journal of International Management 17 (2011) 333â€347 arket reactions to new item presentation (NPI) declarations. NPIs are a significant element of development yield. 3 Firms with the capacity to present new items are motioned as those with the open door for separation and future profit (Chaney et al. , 1991; Kleinschmidt and Cooper, 1991; Subramaniam and Venkatraman, 2001). So as to improve the presentation of NPIs, numerous ? rms are occupied with worldwide diversi? cation exercises (Kogut and Zander, 1993; Peng and Wang, 2000). Past examinations have archived that worldwide diversi? cation accompanies both bene? s and costs (Contractor et al. , 2003; Lu and Beamish, 2004; Ruigrok et al. , 2007). We propose that these bene? ts and expenses may make the two chances and difficulties for ? rms to grow new items, and henceforth in? uence speculators' evaluation of the new it ems presented by ? rms. Universal diversi? cation may effectsly affect NPIs. For instance, it permits ? rms to reach outside their local limits, giving them more chances to increase new thoughts as far as the kinds of new items that can be created (Hitt et al. , 1997). Globally diversi? ed ? ms likewise have better access to the assets inhabitant in outside nations that might be vital for delivering these new items (Craig and Douglas, 2000; Peng and Wang, 2000). Besides, universal diversi? cation makes the bene? t of economies of scale by ef? ciently utilizing the underlying speculations on new items over a more extensive market base (Subramaniam and Venkatraman, 2001). Regardless of the bene? cial impacts of universal diversi? cation, we recommend that worldwide diversi? cation may likewise involve drawbacks with regards to presenting new items. For example, cross-national separations increment the dif? ulty for globally diversi? ed ? rms to move mechanical information between nati ons. Differential ecological settings among nations may likewise oblige the ? rm's capacity to ingest and apply assets towards new item improvement. In such cases, new items are required to be less beneficial for presenting ? rms with worldwide diversi? cation exercises. Notwithstanding examining the immediate effect of global diversi? cation on the securities exchange responses to NPI declarations, we propose that financial specialists' evaluations of the estimation of new items may rely upon a ? m's inner capacities. Expanding past research archiving the significance of innovative and advertising capacities in deciding new item achievement (e. g. , Cooper and Kleinschmidt, 1987; Yeoh and Roth, 1999), we contend that both advertising and innovative capacities help with improving the bene? ts of worldwide diversi? cation while at the same time confining its disadvantages as to the presentation of new items. We test our speculations by estimating the securities exchange reactions to NPI declarations utilizing the occasion study system framework.The occasions of NPI declarations are gathered for the period 1997â€2005. Under the suspicion of the ef? cient markets theory (Fama, 1970), NPI declarations bring unexpected data into ? nancial markets that may change the market esteem evaluations of the reporting ? rms. Because of the new data, changes in stock costs happen, which speak to financial specialists' modification of their desire with respect to the net present estimation of a ? rm's hazard balanced expected money ? ow created by the new items, or expressed in an unexpected way, the speculators' desire for the riches effect of NPIs.This paper is sorted out as follows: Section 2 gives the hypothetical foundation and builds up the theories. Area 3 presents the example and strategy. The observational outcomes are introduced in Section 4. At long last, Section 5 contains the conversation and closing comments of this examination. 2. Hypothetical foundation and speculations International diversi? cation has been recommended by FDI hypothesis and portfolio hypothesis to give ? rms with bene? ts going from the capacity to acknowledge scale economies (Grant, 1987; Porter, 1986), the likelihood to spread speculation chances over various nations (Kim et al. 1993), the possibility to exchange factor cost differentials over various areas (Kogut, 1985) and the chance to get to assets inhabitant in outside nations (Hitt et al. , 1997). In any case, there is extensive hypothetical proof that worldwide diversi? cation accompanies both bene? ts and expenses. We recommend that that these bene? ts and costs that go with outside development may make the two chances and difficulties for ? rms as far as growing new items, and along these lines influence the financial exchange responses to NPI announcements.In this area, we audit different hypothetical areas so as to recognize the channels through which universal diversi? cation may in? uence esteem creatio n for ? rms with regards to NPIs. 2. 1. Impacts of worldwide diversi? cation International diversi? cation gives a few preferences towards growing new items. To start with, worldwide diversi? cation offers open doors for ? rms to increase new and differing thoughts from an assortment of points of view (Hitt et al. , 1997). Being presented to heterogeneous clients, innovation, societies, and serious practices, globally diversi? d ? rms can gain from the involvement with remote tasks to ? nd new answers for bettering item plan and improving the nature of assembling know-how (Craig and Douglas, 2000). For instance, the dispatch of another cordless phone by Sanyo, which had been changed in accordance with better meet the telephone use propensities for American customers (Barkema and Vermeulen, 1998), therefore extended the organization's deals in the U. S. advertise. 3

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