Abstract: This paper models the multinationality and diversifcation of firms jointly. It applies a new typology, distinguishing diversification at home and abroad (multinationality in primary/secondary indsutries), to the corporate structures of a sample of dealding EU manufacturing firms. This provides the framewrok for a sequential stochastic model of firms' decision making. Results suggest that multinationality and diversification are, in general, complementary straegies. In differentiated-product industries, this implies that proprietary assets are a public good within the firm. In homogeneous-product industries, however, there is some evidence of substitutability, in that the two strategies may be alternative routes for escaping constraints on growth.
Return to Other Abstracts Menu.