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Journal of Productivity Analysis

, Volume 30, Issue 2, pp 145–154 | Cite as

Optimal geographic diversification and firm performance: evidence from the U.K.

  • Nigel DriffieldEmail author
  • Jun Du
  • Sourafel Girma
Article

Abstract

This paper examines the relationship between multinationality and firm performance. The analysis is based on a sample of over 400 UK multinationals, and encompasses both service sector and manufacturing sector multinationals. This paper confirms the non-linear relationship between performance and multinationality that is reported elsewhere in the literature, but offers further analysis of this relationship. Specifically, by correcting for endogeneity in the investment decision, and for shocks in productivity across countries, the paper demonstrates that the returns to multinationality are greater than those that have been reported elsewhere, and persist to higher degrees of international diversification.

Keywords

Multinationality Performance Productivity 

JEL Classifications

F23 D24 

Notes

Acknowledgement

The authors wish to acknowledge the support of the ESRC under award number RES-000-22-0468. We would also express our thanks to Davide Castellani and other participants at the UK AIB conference, as well as to Jim Love and Bruce Blonogen conference for comments on an earlier draft.

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Copyright information

© Springer Science+Business Media, LLC 2008

Authors and Affiliations

  1. 1.Economics and Strategy Group, Aston Business SchoolAston UniversityBirminghamUK
  2. 2.Nottingham University Business SchoolNottinghamUK

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