1. ¹Department of Business Policy, National University of Singapore, Singapore
2. ²School of Business, The University of Hong Kong, Hong Kong
3. ³Richard Ivey School of Business, University of Western Ontario, London, Canada

Correspondence: A Delios, Department of Business Policy, National University of Singapore, 1 Business Link, 117592, Singapore. Tel: +65 6516 3094; Fax: +65 6775 5059; E-mail: andrew@nus.edu.sg

Received 1 March 2005; Revised 22 November 2007; Accepted 11 December 2007; Published online 27 March 2008.

Abstract

We examine the product diversification of a multinational firm within each of its host-country markets. Based on a sample of 12,992 foreign subsidiaries of Japanese multinational firms, we find that higher levels of within-country product diversity led to higher subsidiary performance where the institutional strength of the local market was weak, and where a firm's corporate product diversity level was high. Our study highlights the importance of examining a multinational firm's strategy in its individual host-country markets, as influenced by the institutional characteristics of a host-country market and the corporate-level strategy of the multinational firm.