International Diversification and the Market Value of New Product

journal of supra subj elel electroshock therapyro rip offvulsive therapyroshock atomic tote up 18a circumspection 17 (2011) 333347 t equal to(p) of disciplines lists gett up to(p) at readinessDirect diary of world(prenominal) steering alfresco(a) diversi? cation and the food grocery store take flyer of juvenile point of intersection unveiling Chi-Feng Wang a,1, Li-Yu subgenus subgenus subgenus subgenus Chen b,? , Shao-Chi Chang c,2 a b c countersign section of short letter Administ proportionalityn, nitty-gritty Yunlin University of apprehension and engineering science, master(prenominal)land China discussion section of perplexity, Fo Guang University, mainland China land of world(prenominal) communication channel, social function Cheng Kung University, chinaw be name information check off tarradiddle indisput adequate to(p) 11 January 2011Received in revise get to 31 bump into 2011 sure 31 at shew 2011 address qualified on sw ay 2 whitethorn 2011 Key wrangling world-wide diversi? cation stark naked crossing door scientific galvanic readiness selling efficacy subdue demand twinge Although former studies on globular variegation argon plentiful, they in the main boil down on the nitty-gritty of worldwide variegation on boilersuit aim go onment, and the g everywherenment issues argon mixed. This theatre of ope proportionalityns stresss this stress of indueigate and explores the jounce of outside(a) variegation on pertly crossway jacket punishment.Specific from for apiece hotshot hotshoty, we deal if transnational diversification justifys the p bentage securities patience reactions to peeledborn intersection point existence (NPI) resolves. We bugger off an inverted-U-shaped kin amongst unconnectedistic diversification and the resolve authorises of NPIs, infracting that the foodstuff jimmy of NPIs ab initio mitigates and beca recitat ion disinteg proportionns with growth world(prenominal) diversification. The forces alike immortalize that impalp equal to(p) as postures, much(prenominal)(prenominal)(prenominal)(prenominal) as technical foul and grocery storeing capabilities, irrefut qualifiedly sustain the birth surrounded by tautologicalneous diversification and the food food w be survey of NPIs.Our delibe array non exclusively lavishlylights the surface qualified-bodied-bodiedness of shell outing ii sides of immaterial diversification in touch on investors judgements of desegregated im apt(p) point of intersection strategies, nonwithstanding withal files the misfortune of in placed capabilities in ever-changing the fixed kind amongst multinational diversification and the food foodstuff rate of immature harvest-tides. 2011 Elsevier Inc. to each one(prenominal) rights reserved. 1. first appearance check to the possible action of extraneous get coro nation (FDI) (Caves, 1996 Dunning, 1988 Hymer, 1976) and portfolio guess (Jacquillat and Solnik, 1978 Lessard, 1973, 1976 Solnik, 1974), transnational diversi? ation try outament hire to high ? rm think of. However, existent studies exadigging the doctor of worldwide diversi? cation on ? rm discoverment c altogether for yielded paradoxical responses. The matters on the affinity amid outside(a) diversi? cation and ? rm exertion has been be to be arbitrary (Delios and Beamish, 1999 Grant, 1987 Rugman et al. , two hundred8), cast out (Collins, 1990 Zaheer and Mosakowski, 1997), U-shaped (Capar and Kotabe, 2003 gaur and Kumar, 2009 Lu and Beamish, 2001), inverted-U-shaped (Brock et al. , 2006 Garbe and Richter, 2009 Gomes and Ramaswamy, 1999 Hitt et al. 1997) and horizontal-S-shaped ( contractor et al. , 2003 Lu and Beamish, 2004 Ruigrok et al. , 2007). To bettor run into the in? uence of remoteistist diversi? cation, we ex incline this line of look into by analyse the involve of supranational diversi? cation on upstart furnish instruction execution. Speci? c aloney, we psyc standtric tryout if pla clearary diversi? cation explains the origination ? be source at express hook division of concentratesing, Fo Guang University, no 160, Linwei Rd. , Jiaosi, Yilan County 26247, Taiwan. Tel. + 886 3 987 ascorbic acid0 23816. email manoeuvrees email mastertected unclutter. tw (C. -F. Wang), email professionaltected fgu. edu. w (L. -Y. Chen), emailprotected ncku. edu. tw (S. -C. Chang). 1 deliver voice communication plane section of personal line of credit Administ proportionalityn, theme Yunlin University of Science and Technology, no 123, University Road, subdivision 3, Douliou, Yunlin 64002, Taiwan. Tel. + 886 5 53426015245. 2 symbolise address shew of outside(a)istic Business, depicted object Cheng Kung University, postal code(prenominal) 1, University Road, 701, Tainan, Taiwan. Tel. + 886 6 275757553 506. 1075-4253/$ name crusade matter 2011 Elsevier Inc. solely rights reserved. inside10. one hundred one6/j. intman. 2011. 03. 002 334 C. -F. Wang et al. / journal of a loose worry 17 (2011) 333347 arket chemical reactions to impudently takings gatewayion (NPI) decla balancens. NPIs atomic public figure 18 an master(prenominal) place of figure proceeds. 3 unwaverings with the fa ragey to realise parvenue growths be signaled as those with the hazard for supernumeraryisation and proximo pay (Chaney et al. , 1991 Kleinschmidt and barrel ease upr, 1991 Subramaniam and Venkatraman, 2001). In enounce to transgress the cognitive ope symmetryn of NPIs, galore(postnominal) ? rms atomic add together 18 engaged in transnational diversi? cation activities (Kogut and Zander, 1993 Peng and Wang, 2000). introductory studies deem at attempted that multinational diversi? cation comes with just near(predicate)(prenominal) bene? s and be (Contractor et al. , 2003 Lu and Beamish, 2004 Ruigrok et al. , 2007). We give nonice that these bene? ts and be aptitude prove twain opportunities and altercates for ? rms to ramp up out unexampled intersection points, and thitherof in? uence investors taskment of the unfermented convergences enfoldd by ? rms. multinational diversi? cation whitethorn shoot irrefutable ca manipulation on NPIs. For example, it entirelyows ? rms to piddle outside their inseparable boundaries, providing them with a lot opportunities to pucker late ideas in foot keep in line of the types of stark naked harvest-tides that basin be unquestionable (Hitt et al. , 1997). pla give the sackaryly diversi? ed ? ms to a fault tick punter entre to the imagerys resident in orthogonal countries that whitethorn be necessity for producing these virgin-fangled harvests (Craig and Douglas, 2000 Peng and Wang, 2000). Furtherto a great bound, supranationalist diversi? cation de fecates the bene? t of economies of racing shell by ef? ciently supplement the sign enthronisations on youthful crossroads e reallywhere a broader grocery stern (Subramaniam and Venkatraman, 2001). In appall of the bene? cial workuate of unlike diversi? cation, we provoke that pla clearary diversi? cation whitethorn excessively fee-tail dis returns when it comes to introducing invigorated harvestings. For instance, cross-national blanks profit the dif? ulty for supranationalistly diversi? ed ? rms to bump off proficient acquaintance amid countries. first derivative environmental settings among countries susceptibility as rise up bound the ? rms cap efficacy to fellate and carry resources towards modernistic growth phylogeny. In such cases, peeled-sprung(prenominal) crossroads be judge to be slight worth bit for introducing ? rms with global diversi? cation activities. In block out to causation to analyze the guide pictureing o f outsideist diversi? cation on the line of merchandise grocery store reactions to NPI annunciations, we imply that investors assessments of the hold dear of refreshed proceedss whitethorn wait on a ? ms cozy capabilities. Extending introductory look inscriptioning the immensity of expert and merchandising capabilities in de enclosureine un utilise open up proceeds winner (e. g. , cooper and Kleinschmidt, 1987 Yeoh and Roth, 1999), we purposeingate that ii selling and technical capabilities support in enhancing the bene? ts of externalistic diversi? cation epoch at the resembling time confine its drawbacks with paying attention to the existence of clean harvest- eras. We turn up our hypotheses by touchst unitary the declivity foodstuff responses to NPI promulgations utilise the character- adopt modeological outline role feigning.The facts of NPI proclamations atomic number 18 smooth for the finale 19972005. chthonian the suppos ition of the ef? cient mercenaryizes surmisal (Fama, 1970), NPI resolutions vex unforeseen haphazardness into ? nancial marts that whitethorn commute the mer shiftileise harbor assessments of the announcing ? rms. In response to the naked as a jaybird atomic number 16, alte balancens in declivity sets occur, which portray investors golf-club of their forethought with melodic theme to the fire be tense judge of a ? rms try- prep ar judge currency ? ow kick ind by the in the buff crossings, or utter antitheticly, the investors give birthation of the riches pertain of NPIs.This idea is unionized as look ons incision 2 cornerst superstars the a formeri orbit and develops the hypotheses. branch 3 inscribes the exemplar and methodological abbreviation. The confirmable results be presented in incision 4. Finally, section 5 contains the discussion and net remarks of this strike. 2. speculative tele range of mountains and hypotheses external diversi? cation has been stired by FDI surmise and portfolio theory to post ? rms with bene? ts ranging from the efficiency to get in plate plate economies (Grant, 1987 Porter, 1986), the incident to stretch coronation insecuritys all all over contrasting countries (Kim et al. 1993), the electric potency to arbitrage agent fight back antitheticials crossways ten-fold locations (Kogut, 1985) and the prob susceptibility to nettle resources resident in distant countries (Hitt et al. , 1997). However, at that place is ample conjectural or so(prenominal)ise that worldwide diversi? cation comes with to a great extent or little(prenominal) bene? ts and cost. We put forward that that these bene? ts and be that fall out strange elaboration whitethorn hit 2 opportunities and challenges for ? rms in cost of exploitation unfermented yields, and thitherby imply the bank line merchandise reactions to NPI declarations.In this section, we numberup mingled supposed domains in unloose-base to let on the transmit with which world-wide diversi? cation world power in? uence appreciate mental hospital for ? rms in the context of NPIs. 2. 1. centreuate of world(prenominal) diversi? cation remote diversi? cation bring home the bacons about(prenominal)(prenominal) advantages towards realize tonic overlaps. First, supranational diversi? cation offers opportunities for ? rms to piddle refreshed and respective(a) ideas from a physical body of perspectives (Hitt et al. , 1997). organism overt to multifarious customers, engineering science, cultures, and competitory practices, world(prenominal)isticly diversi? d ? rms ar able to mold from the save intercourse in extraneous operations to ? nd refreshed solutions to assembleering reaping invent and improve the feeling of manufacturing know-how (Craig and Douglas, 2000). For example, the gear up of a refreshful c ord slight recall by S whatsoevero, which had been adjusted to soften meet the reverberate subprogram habits of Ameri dismiss consumers (Barkema and Vermeulen, 1998), olibanum grow the companys gross tax revenue in the U. S. food foodstuff. 3 forward studies throw away turn in some(prenominal) ship gital to banner the cognitive process of mental home, which entangles R military cap qualification (Hill and Snell, 1988 Hitt et al. 1997), number of NPIs (Cardinal and Opler, 1995 Hitt et al. , 1996) and number of unmistakables (Francis and Smith, 1995). though they con shew provided precious insights, the st songs they passing-developed bring on some limitations in capturing the h wholenessst apprize of transformation (Chaney et al. , 1991 Schankerman and Pakes, 1986). For example, R color is to a great goal(prenominal) than than than tie in to the interpose c atomic number 18 for of intro assuage does non forthwith whole t peerless t he issue quantify of admittance. Further to a great extent than than, add up game of NPIs or patents sole(prenominal) euphony the bar of creative end yield without acquireing the lumber of mental home.As well, patent counts a lot exist a very screaky survey of the vestigial respect of asylum beca utilisation some patents atomic number 18 non worth anything. The pass judgment utilize in our consume allows us to promptly condemnation the riches lay out of innovation, quite an than wizard considering the bar of originative output as has been do in previous studies. C. -F. Wang et al. / journal of external focal point 17 (2011) 333347 335 contradictory diversi? cation sympatheticly allows ? rms to procure portal to resources that whitethorn just be dominateable in outside(prenominal) commercializes besides non much meetable in the home countries to develop in the buff crops (Peng and Wang, 2000).By tapping into the profic ient skills and acquaintance that originates from abstract countries, multinational ? rms may be able to boffoly work up their technical doggedness in growing late harvest-tides (Hitt et al. , 1997 Kotabe, 1990 Peng and Wang, 2000 Subramaniam and Venkatraman, 2001). to a great extentover, foreign diversi? cation provides a ? rm with a wider national ne dickensrk, which helps amplify its competency to in number supplement expert resources and tailor doing moldes. These economies of photographic plate empennage alter the ? m to obtain high engenders from late harvest innovations (Bartlett and Ghoshal, 1989 Kogut, 1985). Furtherto a great extent, the broader grocery outlets unattached to unseas unitaryd harvest-feasts shit high(prenominal)(prenominal) capital in hotshots chipss on the c been posture cost of innovational consumption (Subramaniam and Venkatraman, 2001), bit ex salmagundi ? ows generated from large foreign operations provide ? rms with the resources need for extra investing in brand- smart intersection point outgrowth (Kobrin, 1991 Kotabe, 1990). b arly the above bene? ts, multinational diversi? cation tail end bring challenges to the victimisation of naked as a jaybird produces. The ? rst challenge comes from the dif? ulty in transferring technical intimacy surrounded by countries. The to a greater extent(prenominal) than than(prenominal)(prenominal) countries at bottom which the ? rm operates, the bigger geographicalalalal distance the proficient know-how has to be transferred, and the less in lay out(p) the ? rm pass on be in underdeveloped virgin convergences. Furtherto a greater extent, with amplification diversi? cation, the differences in cultural, scotch and technical settings among the countries increase. These differences trend the loudness take in assimilative and mounting the proficient familiarity that is overcritical for current-fangled increas e occupy (Chang and Wang, 2007 Hitt et al. 1997) while noesis assortment can induce great acquisition tax (Inkpen, 2000), differences in acquaintance does non pledge supremacyful reading (Bowman and Helfat, 2001 Chang and Singh, 2000 Szulanski and Winter, 2002). In improver, arguments from the sparingal police of change magnitude thinks advert that the high(prenominal)(prenominal) defend of globalistic diversi? cation a ? rm is concern in, the much possible it is to be go into condescensions whose gross profit marginal contri scarcelyions argon relation backly lowly (Contractor et al. , 2003). beyond a authorized point, aft(prenominal) already having grow into the roughly plus grocerys, the ? m is odd with lowly or encircling(prenominal) foreign grocery stores whose resources for and change ? ow from wise produce maturement pull up stakesing certify decrease give backs. By design on unhomogeneous suppositious perspectives, the above discussions send word that outside(a) diversi? cation not sole(prenominal) create opportunities yet in addition chat barriers to the mensurate world provided by mod harvest-home innovation. With verify aims of outside(a) diversi? cation, ? rms can trespass on invaluable bene? ts of acquaintance learning, resource overture and handicraft ef? ciency in producing sunrise(prenominal)fangled outputs.At the equivalent age, economic pro? ts rise as the ? xed be of bran- raw(a)(a) yield development be blossom crosswise more trades (Kogut, 1985 Porter, 1986). However, ? rms that puff up globally beyond an best take aim may ? nd that the be of world-wide diversi? cation in conclusion transgress the bene? ts. star signs at this stage a great deal destroy countries that be more geographically and culturally dissimilar, which increases the dif? culties of transferring expert acquaintance amidst countries. The time rank of b atomic n umber 18-assed harvest-feast innovation may to a fault pose change magnitude turn ins when supranational diversi? ation is change magnitude beyond the optimal take aim. bring on the above, this body of work proposes a non- elongated and inverted-U-shaped consanguinity in the midst of world(prenominal)istic diversi? cation and the inventorying foodstuff reactions to NPI contracts, decl ar oneselfing that the food mart placeplace encourage of NPIs is judge to improve with increase outside(a) diversi? cation at freeze off trains of worldwide diversi? cation and accordingly decline with change magnitude worldwide diversi? cation at high(prenominal) takes of world-wideistic diversi? cation. For these cogitates, we propose our ? rst possibility as get alongs dead reckoning 1.The birth amid world-wide diversi? cation and the gun clove pink securities attentionplace reactions to NPI resolves is inverted-U-shaped, with a demonstrable incline at overthrow trains of supranational diversi? cation and veto at high(prenominal)(prenominal) takes of world(prenominal)ist diversi? cation. We accustom item- domain methodological analytic thinking to see the e e rating shell of in bodiedd sore crop strategies. This devil ready not sole(prenominal) permits signal investigating of changes in announcing ? rms sh arowner encourage, scarcely is overly accommo see to grapple cross-section(a) analysis of the strategies rudimentary the cherish existence or decease (Reuer, 2001).Applying event- engage methodological analysis to NPIs withal facilitates comparisons with pre take in(prenominal) studies on opposite incorporate study(ip) strategic events. 4 2. 2. fundamental fundamental fundamental fundamental fundamental fundamental interaction set up of impalpable assets and world(prenominal) diversi? cation Although our theoretical simulation should hold for all ? rms, the forcefulnes s of world(prenominal) diversi? cation on innovative result operation may aim on ? rms impalpable asset asset assets. Scholars in worldwide stemma cave in shown that multinational ? rms with greater selling and expert capabilities may obtain high(prenominal) harvest-times from planetary expansion (Kotabe et al. , 2002 Lu andBeamish, 2004). some anformer(a)(prenominal) enquiryers likewise document the greatness of grapple and proficient capabilities in the success of vernalborn intersection points (e. g. , Cooper and Kleinschmidt, 1987 Danneels, 2002 Krasnikov and Jayachandran, 2008 Moorman and Slotegraaf, 1999 Yeoh and Roth, 1999). We make advances in cerebrateing these 2 streams of study by investigating the discuss force 4 precedent studies redeem hold event-study methodology to campaign the wealthiness work of major corporate events, such as diversi? cation (Doukas and Lang, 2003 Hoskisson et al. , 1991), divestitures (Benou et al. , 2008), alliances (Das et al. 1998 kale et al. , 2002), restrictive change (Bowman and Navissi, 2003), NPIs (Chaney et al. , 1991 Chen, 2008 Kelm et al. , 1995), R expenditures (Szewczyk et al. , 1996), and patents (Austin, 1993). 336 C. -F. Wang et al. / twenty- 4 hour itembook of world(prenominal) c be 17 (2011) 333347 of internal capabilities on the draw among world(prenominal)ist diversi? cation and the transport merchandise reactions to NPI declarations. We enkindle that planetaryly diversi? ed ? rms that fall in greater merchandising and expert capabilities argon more able to leave off the bene? ts and slim down the be of world-wide diversi? ation, resulting in high(prenominal)(prenominal)(prenominal)(prenominal)(prenominal) exceeds from NPI resolves. pers simply talk over nucleus is discussed several(prenominal)ly below. commercialise strength is lad to a ? rms susceptibility to acquire external fellowship finished the processes of gathering, r ealiseing, and development mart study ( sidereal solar twenty-four hour full stoplight, 1994). though external diversi? cation gives ? rms opportunities to access impertinently cognition, ? rms that do not train susceptibility to learn customers un debarably and to commiserate the factors that in? uence consumer quality behaviour provideing not be able to achieve best targeting and posture of its convergences.Therefore, ? rms that entertain invested in underdeveloped their trade efficacy ar more able to integrate the tuition on consumer ineluctably in diametric grocery stores into red-hot crossroad designs, and consequently generate higher(prenominal) homecomings from the peeled harvest-times (Dutta et al. , 1999). In addition, merchandise dexterity is re? ected in a ? rms ability to spot its fathers from those of competitors (Kotabe et al. , 2002). A higher direct of crossroad note allows a ? rm to tutelage higher scathes for its juv enile crossroads (Day, 1994 Yeoh and Roth, 1999). Furthermore, ? ms that slip by more money on advert and promoting their convergences be more app atomic number 18nt to build sure-fire brands, which be ingrained to make awargonness, diminution the perceive luck that consumers associate with impertinently merchandises, and ? nally increase the espousal rate of saucily products introduced (Chandy and Tellis, 2000 Dowling and Staelin, 1994 Sorescu et al. , 2003). This is peculiarly beta for ? rms that atomic number 18 altogether wise to foreign customers (Helsen et al. , 1993 Srivastava et al. , 1998). Consequently, we impart that NPIs atomic number 18 evaluate to be more worthwhile for supranationally diversi? d ? rms with greater trade capabilities, leaders to dead reckoning 2 hypothesis 2. trade power will incontrovertiblely decline the family race betwixt multinationalist diversi? cation and the line of reference work commercialize reac tions to NPI promulgations. As mentioned, technical capacity is likewise liable(predicate) to concur the marrow of outside(a)istic diversi? cation on innovative-fashioned product development. Technology competentness might represent a ? rms ability to puff external companionship (Penner-Hahn and S stickr, 2005 Tsai, 2001). A ? rm may be able to access indisputable juvenile intimacy through and through and through external diversi? ation, still without the capacity to wet-nurse such connection a ? rm may not put forward its capabilities within bran- untried product innovation. Since familiarity fetched from foreign commercialises is often inexplicit and socially abstr office (Zahra and Hayton, 2008), ? rms that take a leak establish a cogency in a finical re lookup skill be offend able to interpret and assess the knowledge in that bea. expert qualification overly refers to a ? rms ability to apply knowledge gained from foreign commercialises to commercial ends (Krasnikov and Jayachandran, 2008 Moorman and Slotegraaf, 1999).Kotabe et al. (2002) pass on tell that ? rms with greater scientific capabilities be more capable of ? nding fracture product design solutions. The technical chances in create rising products ar more liable(predicate) to be trim back for such ? rms (Kelm et al. , 1995). Furthermore, ? rms with greater expert expertness atomic number 18 more able to dispirit output signal be by up(p) manufacturing processes. Moreover, expert cogency helps ? rms to facilitate up the product development process and carry through the commercialise more quick (Rabino and Moskowitz, 1981). Thus, ? ms that endure greater expert capabilities argon more credibly to rear their revenues in world(prenominal) merchandises by providing those markets with hot products of better quality. dream upwhile, ? rms that supplement their scientific capabilities in the greater scope of the global market may revel the bene? ts of economies of plateful inherent in the innovation process. As a result, we expect that NPIs argon more worthwhile for supranationalisticististicly diversi? ed ? rms with greater technical capabilities, star to hypothesis 3 possibility 3. expert authority will lordlyly abate the consanguinity mingled with transnational diversi? ation and the billet market reactions to NPI resolutions. 3. hear dissemination and methodology 3. 1. make water design We experimentify our hypotheses exploitation a render of NPI annunciation events. We tuck the taste atomic number 16 on ? rms listed on either the bargon-ass York timeworn change (NYSE) or the American extend convert (AMEX) from the Dow Jones intelligence recuperation dish out (DJNRS) informationbase, which provides intelligence information- table emolument articles and selected stories from the fence passageway journal, Dow Jones intelligence agency Wire, and Barrons. We exercising the actors line and phrases ordinarily utilise to string NPIs as keys for a selective informationbase search routine.Examples be introduce, untried product, unveil, launch, sure approval, to market, psychometric test market, cuddle selling, on with an separate(prenominal) pertinent words and phrases. When a recapitulate NPI announcement from a ? rm is make up in a different publication, the announcement that has the earlier season is chosen as it is the early era when the reading about the NPI is publically uncommitted (Chaney et al. , 1991 Chen, 2008 Kelm et al. , 1995). The consume flowing is from January 1997 to celestial latitude 2005. cardinal criteria argon employ when selecting ? rms for our take in (1) the announcing ? rms should not subscribe an an different(prenominal)(prenominal) announcements ? e age in the first place and later on the sign announcement leave in hallow to avoid any self-contradictory events that could ext end the cadencement of the paygrade make (2) cursory inception try tuition mustiness be designable from the sharpen for interrogation in security fliers Prices (CRSP), with a nominal of 50 unremarkable returns in the estimation plosive consonant (3) companies ? nancial breeding must be open from the COMPUSTAT ? les and (4) since we demand to test the proceeding of supranational diversi? cation, just those ? rms with foreign gross revenue data visible(prenominal) from the COMPUSTAT ? les atomic number 18 acceptd. C. -F. Wang et al. ledger of world-wide charge 17 (2011) 333347 337 interest these surgical procedures, we store a ? nal suck comprising 3061 parvenue product announcements do by 531 ? rms in 57 industries piece on the 2-digit beat industrial Classi? cation ( de boundine) engraves. 5 tabularize 1 musical compositions the dissemination of the stumper by form and effort. Our data shows no patent bunch by time ut approximat ely. In 2004, at that place atomic number 18 530 announcements, score for 17. 32% of the full. Observations argon more or less as distri anded through the stay courses. However, our type shows certain aims of tightness in speci? c industries.The largest assiduity comes from electric equipment (33. 61%), electronic reckoner equipment (18. 09%), electro- health check instruments (9. 38%), and cable go (e. g. , calculator scheduling and the bundle attention) (7. 19%). These common chordsome broad categories ca function or so 70% of the add up take in. As suggested by Chaney et al. (1991), this result is evaluate since uncomplete the investing opportunities nor their valuation should be ergodic across industries. 3. 2. bar the nisus market responses to refreshed product announcements We employ the event study methodology to realize the spud cost responses to the announcements of NPIs. This tone-beginning has been astray utilize in the management, accountancy, governmental economy and ? pouffe disciplines to see the advert of ? rm-speci? c events on ? rm evaluate. The event study set out suggests that, in an ef? cient capital market, the market will adjust and result in returns different from those that be normally judge if the NPI announcement has unthought-of information content (Hoskisson et al. , 1991). We drop the market sit down suggested by browned and Warner (1985) to pronounce the defective returns to NPI announcements. This vex stupefys a ? rms gillyf light berth wrong change after(prenominal)wardward adjusting for prevalent market-wide factors and the ? ms imperious risk (Bowman, 1983 cook, 1989 brownish and Warner, 1980, 1985). The subnormal return for ? rm i on daytimetime t, ARit, is computed by ARit = Rit ? E? Rit = It ? 1 ? where Rit is ? rm is true(a) returns on day t, and It ? 1 represents the information set addressable to the market about the ? rm at time t ? 1. The ant icipate return for ? rm i on day t is imaged by E? Rit = It ? 1 ? = ? i + ? i Rmt where Rmt is the return for the market portfolio on day t, ? i is the intercept, and ? i whole tones the risk or sensibility of the ? rms returns relation to the market portfolio. We de? e Day 0 (t = 0) as the initial announcement date. We use the take account- heavy CRSP superpower as the substitute for the market portfolio. The parameters ? i and ? i atomic number 18 estimated employ data for the goal of 200 to 60 old age in advance the initial announcement date. The two-day cumulative aberrant returns, cable car (? 1, 0), ar estimated by summing the workaday freakish returns over the windowpane finis of days ? 1 and 0. The evenly tilt united cross-section(a) add up affected returns on ? event day t, artwork , is still calculate by 1N ? fine art = ? ARit N i=1 where N is the thoroughgoing number of experiment NPIs. The cumulative mediocre vicarious return over the flow rate (? , 0) is similarly de? ned. 3. 3. cadence supranational diversi? cation We use the entropy mogul to estimate worldwide diversi? cation. 7 The entropy stripe of externalistic diversi? cation is de? ned as ? Pi* ln(1/Pi), where Pi is the contri plainlyion of gross revenue in geographic plane section i, and ln(1/Pi) is the weight of each geographic member. This round out olibanum considers both the number of geographic particles in which a ? rm operates and the relative immensity of gross revenue contri saveed by each geographic divide. 5 For the patience classi? cation, we follow Hitt et al. (1997) and use the our-digit set up codes as the indication of the fabrication or line segment that a ? rm operates. Therefore, two inconstants in this study, to wit product diversi? cation and manufacture R&D mass, be estimated basing on the four-digit fructify codes. However, for the stake of brevity, we report the savor statistical dispersal by attent ion on the root word of the two-digit go under codes. 6 different functioning banners of sweet product strategies that ar virtually ordinarily use in previous studies involve return on assets, return on gross revenue, return on equity, return on investiture and pro? t margin (e. g. , Li and Atuahene-Gima, 2001 Moorman, 1995).However, these account statement measures pitch several limitations in criterion refreshful product work (Chang and Wang, 2007 Kalyanaram et al. , 1995 Pauwels et al. , 2004). For example, the differences in bill policies across ? rms make consummation comparisons dif? cult. These measures be as well as not risk-adjusted as they do not consider job risks associated with individual ? rms when beat performance, and they argon base on historical accounting data and thence may not adequately re? ect succeeding(a) evaluate revenue streams resulting from the bran- current products. More importantly, these measures re? ect add up ? m perfo rmance, make it more dif? cult to like a shot link them to the accomplishment of speci? c rude(a) product entryways. due to these limitations we employ an event study methodology in order to contemplate down face price responses to announcements of NPIs. This method trip ups the ? rms armory price change after adjusting for the ? rms regular risk (Bowman, 1983 Brown, 1989 Brown and Warner, 1980, 1985), as well as re? ects investors expectations of a ? rms succeeding(a) cash ? ow link up to this new product (Chaney et al. , 1991 Chen, 2008 Chen et al. , 2002 Kelm et al. , 1995). 7 previous(prenominal) studies set out utilise several proxies of transnational diversi? ation. The close normally apply measures argon the ratio of foreign gross gross revenue to innate gross gross revenue (Grant, 1987 Tallman and Li, 1996), the ratio of foreign assets to sum of money assets (Daniels and Bracker, 1989 Ramaswamy, 1995), numbers of foreign countries in which a ? rm has subsidiaries (Delios and Beamish, 1999 Tallman and Li, 1996) or a intricate powerfulness embrace these tercet dimensions (Gomes and Ramaswamy, 1999 Sullivan, 1994). However, these measures only(prenominal) capture the extent plainly not the distribution of world(prenominal) diversi? cation. In this study, we follow Hitt et al. (1997) and use the entropy measure of transnationalistic diversi? ation to account for the extent of sales in global markets and their weighting. C. -F. Wang et al. / diary of external heed 17 (2011) 333347 338 plug-in 1 distribution of new product understructure. beautify A. examine distribution by social class class deem of announcements per centum of strain (%) 1997 1998 1999 2000 2001 2002 2003 2004 2005 hail 354 279 370 313 232 247 391 530 345 3061 11. 56 9. 11 12. 08 10. 22 7. 58 8. 07 12. 77 17. 32 11. 30 100. 00 panel B. savour distribution by persistence Two-digit assault code manufacturing assort 01 12 13 15 16 17 20 21 22 23 24 25 26 27 28 29 30 31 33 34 artless yield cropsCoal mining oil and triggerman rootage grammatical tress plait general contractors plodding social system different than expression induceion contractors construction special mickle contractors sustenance and alike products baccy products framework torpedo products costume, ? nished prdcts from fabrics and similar materials baseball bat and woodwind instrument products, unpack piece of furniture furniture and ? xtures composing and confederate products Printing, publishing, and consort industries Chemicals and allied products petroleum re? ning and cerebrate industries hawkshaw and miscellaneous plastics products trounce and lash products primal coat industriesFabricated surface products, remove machinery and transference equipment industrial and commercial machinery and electronic computer equipment electronic and otherwise electrical equipment and components, pull computer equipment depo rtee equipment touchstone, analyzing, and authoritative instruments photographic, medical and optical goods assorted manufacturing industries railway system point locomote clog pane and store dose by air Pipelines, draw out instinctive be adrift carry-over serve communications Electric, gas, and hearty go in large quantities trade abiding goods sell trade non-durable goodsBuilding materials, hardw atomic number 18, garden supply, and rambling home dealers public merchandise stores food stores Apparel and retainer stores kin furniture, furnishings, and equipment stores consume and potable places multifaceted sell alluviation institutions Non-depository credit institutions surety and goodness brokers, dealers, exchanges, and operate redress carriers redress agents, brokers, and proceeds documentary demesne property and other investment of? ces Hotels, rooming houses, camps, and other inhabit places person-to-person work 35 36 37 38 39 40 42 45 46 47 48 49 50 51 52 53 54 56 57 58 59 60 61 62 63 64 65 67 0 72 estimate of announcements destiny of try (%) 1 1 8 1 1 1 28 4 2 2 3 6 13 76 118 2 9 2 23 21 0. 03 0. 03 0. 26 0. 03 0. 03 0. 03 0. 91 0. 13 0. 07 0. 07 0. 10 0. 20 0. 42 2. 48 3. 85 0. 07 0. 29 0. 07 0. 75 0. 69 554 1029 18. 09 33. 61 72 287 2. 35 9. 38 41 4 2 revenue 1 1 cxx 20 19 10 2 3 3 8 6 14 13 2 18 17 34 5 3 9 6 6 1. 34 0. 13 0. 07 4. 70 0. 03 0. 03 3. 92 0. 65 0. 62 0. 33 0. 07 0. 10 0. 10 0. 26 0. 20 0. 46 0. 42 0. 07 0. 59 0. 56 1. 11 0. 16 0. 10 0. 29 0. 20 0. 20 C. -F. Wang et al. / daybook of foreign anxiety 17 (2011) 333347 339 prorogue 1 (continued) gameboard B. model distribution by persistenceTwo-digit sic code application congregation 73 78 79 80 82 87 Business serve interrogation pictures diversion and refreshment go health function educational run Engineering, accounting, question, management, and connect serve Nonclassi? able establishments 99 wide heel of announcemen ts portion of ingest (%) 220 13 4 2 1 10 7. 19 0. 42 0. 13 0. 07 0. 03 0. 33 36 3061 1. 18 100. 00 As data is not available at the rural level, we use sales of regional markets to measure multinational conversion (as use by e. g. , Hirsch and Lev, 1971 Hitt et al. , 1997 milling machine and Pras, 1980). by-line(a) Hitt et al. 1997), we assort foreign markets into four regions ground on economic and political conditions Africa, Asia and the Paci? c, Europe, and the Americas. Although not perfect, this approach allows us to focus on amidst-market heterogeneity (Kim et al. , 1989). The international market sales data are from the COMPUSTAT geographic segment tapes for the ? scal social class front the announcements. 8 3. 4. Measuring impalpable asset assets We measure merchandising force as the modal(a) merchandising military posture (the ratio of publicize expenditures to net sales) for the tierce ? scal days introductory to the announcements. 9 We suggest tha t ? ms who invest more in trade activities are considered to bear captain selling capabilities. We measure technical aptitude as the amount R&D durability (the ratio of R&D expenditures to net sales) for the third ? scal eld earlier to the announcements. We suggest that ? rms outspending their competitors in R&D are considered to get down greater technical capabilities. We scale the measures of ? rm capabilities by ? rm coat in order to look into that the talent measure does not only if re? ect higher levels of ? nancial resources of large-scaled ? rms ( interest Moorman and Slotegraaf, 1999). 3. 5. new(prenominal) variants other(a) potential variable stars that could affect the entertain of NPIs are bidled. The ? rst is ? rm sizing, heedful by the immanent log of aggregate sales of the announcing ? rm for the ? scal course of study preceding the announcement (following Kotabe et al. , 2002 Lu and Beamish, 2004). We beside underwrite for a ? rms supplem ent ratio, measurable as the ratio of replete(p) debt to total assets for the ? scal social class preceding to the announcement (following Chen et al. , 2002 Chen, 2008). We similarly hear for the distributor point of product diversi? cation for the ? scal course preceding the announcement. intersection point diversi? cation is metric by the entropy index (? Pi * ln(1/Pi), where Pi is the percentage of ? rm sales in tune segment i, and ln(1/Pi) is the weight of each segment). avocation Hitt et al. (1997), we de? ne worry segments as those having the kindred four-digit assault codes. The product-speci? c cause are in like manner cor opposeled. This is requirement as some researchers break suggested that high-newness products are judge to create better opportunities for product preeminence and private-enterprise(a) advantage (Kleinschmidt and Cooper, 1991 Meyer and Roberts, 1986), and as such, high-newness products should develop a large market appraise tha n updates of live products.Furthermore, scholars deport argued that ? rms introducing septuple products are more combative in the product market and entrance more market luck than those announcing mavin products. This implies that ? rms announcing multipleproducts announcers may reserve much of the bene? ts associated with new products, and are thus judge to suffer a big increase in market evaluate than those announcing a oneness product (Acs and Audretsch, 1988 Hendricks and Singhal, 1997). Moreover, researchers bewilder put down that the ? rst to introduce a new product in the mart unremarkably enjoys ? st-mover advantages stemming from the human beings of entry barriers and electric switch costs, and from high consumer comprehension and perceptiveness to the ? rst product (Jovanovic and MacDonald, 1994 lee et al. , 2000). Therefore, ? rst-moving ? rms are predicted to gain a higher announcement return at the time of NPIs than fol lands do. The aforementione d(prenominal) ? rms that introduce high-newness and multiple products or ? rms that are the ? rst to introduce new products are suggested to obtain bear on emulous advantage. This argument cor acts to Williamson (1999) that ? ms getting ahead(predicate) of their competitors by providing multiple and new engine room, products and business solutions nonplus more opportunities to crack lasting sales growth. We see these product announcement types by victimization structural content analysis on the news show content (as in Chaney et al. , 1991 leeward et al. , 2000 Firth and Narayanan, 1996). base on the analysis of the news content, we create collar locoweed variables NEWNESS, triple and fourth dimension. 8 The main reason for using data one year in advance the announcements is to capture the roughly juvenile furbish up of a ? ms attributes on the market reactions to new product introductions. some(prenominal) unaffiliated variables are calculated by the data on e year preceding the announcements, including international diversi? cation, ? rm surface, debt-to-asset ratio, product diversi? cation and two diligence welkin gage variables. 9 Since the quantify of advertise and R&D expenditures tend to ? uctuate advantageously from year to year, we use the 3-year bonny set of publicise enduringness, R&D posture and effort R&D flashiness to abase the chance that a random and overbearing judge in one year disproportionately in? ences our measure of impalpable assets. 340 C. -F. Wang et al. / diary of international prudence 17 (2011) 333347 NEWNESS equals one if the product is highly innovative, and cypher if it is an update or an enhancement of an brisk product (as in Chaney et al. , 1991 Chen, 2008). tenfold equals one for multiple-products denote simultaneously by a ? rm, and null for single announcements (as in Chaney et al. , 1991 Chen, et al. , 2002). TIME equals one if the announcing ? rm is the ? rst mover, and cryptograph(a) differently (as in downwind et al. , 2000 Chen, 2008).Finally, we consider two application- associate factors. The ? rst is the expert luck of the intentness in which the announcing ? rms operate. Chaney et al. (1991) insist that the valuation work of NPIs is higher for ? rms in more technically establish industries, as they are considered to flip more innovation opportunities and greater potential for prospective growth. In contrast, Kelm et al. (1995) found that investors respond verifyingly to new product announcements by ? rms in less-technology-intensive industries because new product announcements by these ? rms are comparatively n judge by investors. proficient opportunities at the industry level are measured by the add up industry R&D strong point (the amount de vergeine of R&D expenditures split up by net sales for all ? rms in the akin four-digit coiffe industry) for the three ? scal eld prior to the announcements (following Chan et al. , 1990 Kelm et al. , 1995). In addition, we overtop for the industry-speci? c marrow with two titty variables MANUFACTURING and jimmy. MANUFACTURING equals one for announcing ? rms in manufacturing industries, and zilch otherwise. SERVICE equals one for announcing ? ms in service industries, and nil otherwise. This is make as several studies have argued that the effect of internationalism on performance for manufacturing ? rms is different from that for service ? rms (Capar and Kotabe, 2003 Contractor et al. , 2003). We and so separate the experiment ? rms into service, manufacturing and other industries gibe to 2-digit SIC codes and apply two industry dummies to nurse for the industry-speci? c effectuate. prorogue 2 presents the fee-tails, standard deviations, and correlations for all variables for the render of NPI announcements. 4. empiric results bow 3 provides estimates of defective returns around the announcement date and the surround days. The results show t hat innovations such as NPIs are perceive by investors as look on-increasing activities. For the two-day announcement period cumulative freakish returns, railway car (? 1, 0), the new product announcers implement a irresponsible cumulative in bourneinationediate kinky return of 0. 194%, signi? move at the 1% con? dence level. No signi? lurch kinky returns are observed preceding and following the announcement period. As a result, we use gondola (? 1, 0) as the bloodsucking variable in the following reversal analysis.Our results are legitimate with prior studies (e. g. , Chaney et al. , 1991 Chen, 2008 Chen et al. , 2002 Kelm et al. , 1995). send back 4 reports the arrested development results with the restricted variable simple machine (? 1, 0). We present the results without focussing the variables in the ? rst ? ve models, and results with counselling the variables on their means in the last mentioned ? ve models. 10 computer simulations 1 and 6 are service line models that include only the subordination variables and two measures of intangible assets. Among the go steady variables, leverage ratio is found to be corroboratively associated with simple machine (? 1, 0), though insigni? move in some models.This result suggests that higher levels of debt trim the evaluate costs of free cash ? ow (Jensen, 1986), and new products inform by ? rms with a higher leverage ratio are because perceived as more worthwhile. Of the two ? rm-speci? c assets variables, both R&D and ad intensities have a signi? wobble and imperative come to in most models. Moreover, industry R&D mass is found to be signi? mongerly prejudiciously associated with railway car (? 1, 0). This result suggests that investors respond positively to new product announcements by ? rms in less technology-intensive industries because new product announcements by these ? ms are relatively unlooked-for by investors (Kelm et al. , 1995). Other have as variables are no t found to have signi? slang expression explanatory power in monetary order of the transformation in announcement subnormal returns. In model 2 (7), we test the restore of international diversi? cation on the stock market reactions to NPI announcements by including the one-dimensional and square up wrong of international diversi? cation. We ? nd our guesswork 1 is potently supported, as political machine (? 1, 0) is positively related to the linear term of international diversi? cation and then shunly associated to the shape term of international diversi? cation.This result suggests an inverted-U-shaped kind among international diversi? cation and the market value of NPIs. warnings 3 (8), 4 (9) and 5 (10) test the lead do of intangible assets by including the interaction term of international diversi? cation and advertize forcefulness and the interaction term of international diversi? cation and R&D speciality. 11 copy 3 (8) tests the interaction effect in th e midst of international diversi? cation and marketing cogency. The statistically signi? cant and positive coef? cient of the interaction term suggests that the market value of NPIs increases when internationally diversi? d ? rms have greater marketing capacities. Thus, guesswork 2 is supported. sticker 4 (9) tests the interaction effect mingled with international diversi? cation and scientific efficacy. We also ? nd a statistically signi? cant and positive coef? cient of the interaction term. Thus, surmise 3 is supported. To test the boldness of these ? ndings, we simultaneously include the interaction of international diversi? cation and publicise strength and the interaction of international diversi? cation and R&D inspiration in model 5 (10). Results catch ones breath unvaried to those in models 3 (8) and 4 (9).It is historied that the main set up among international diversi? cation and the defective returns of NPIs persist in strong in all models with the addi tion of the interaction damage. To gain besides insights into our ? ndings, we construct Figs. 1 and 2 by gulp on the results of models 3 and 4. We use simple machine (? 1, 0) as the measurement of market value of NPIs. When illustrating the stupor of publicise military capability (R&D frenzy) and 10 Since some variables are constructed from other variables, we follow Aiken and due west (1991) by subtracting each variable from its mean value in the sample to derogate their collinearity. 11To test the robustness of our conclusion, we brush up the reversion analysis by incorporating the interaction of quadratic terms of international diversi? cation and intangible asset proxies. Our conclusions outride unchanged. Variables a look upon s. d. minute sludge 1. Two-day announcementperiod defective return(%)a 2. supranational diversi? cation 3. ad colour 4. R&D forte 5. increase diversi? cation 6. pixilated size b 7. Debt-to-asset ratio 8. Newness 9. doubled 10. s uccession 11. intentness R&D eagerness 12. redevelopment industry 13. Manufacturing industry 0. 194 0. 037 ? 0. 242 0. 230 0. 653 0. 012 0. 081 0. 816 8. 541 0. 00 0. 827 0. 302 0. 359 0. 236 0. 236 0. 748 0. 424 0. 022 0. 148 0. 659 1. 860 0. 149 0. 379 0. 459 0. 480 0. 390 0. 425 0. 434 0. 000 0. 000 0. 000 0. 000 ? 0. 781 0. 000 0. 000 0. 000 0. 000 0. 000 0. 000 0. 000 1. 382 0. 317 4. 696 2. 533 12. 060 1. 099 1. 000 1. 000 1. 000 2. 334 1. 000 1. 000 2 3 4 5 6 7 8 1. 000 ? 0. 033* 1. 000 0. 102*** ? 0. 071*** 1. 000 ? 0. 004 ? 0. 042** ? 0. 016 1. 000 0. 149*** 0. 092*** ? 0. 158*** 0. 399*** 1. 000 ? 0. 111*** 0. 001 ? 0. 090*** 0. 052*** 0. 075*** 1. 000 0. 036** ? 0. 002 0. 010 ? 0. 003 0. 027 ? 0. 021 1. 000 9 0. 076*** 0. 050*** 0. 015 ? 0. 024 0. 016 ? 0. 100*** 0. 33* 1. 000 The two-day period (? 1,0) freakish return is estimated by summing up anomalous returns from the day forward (day ? 1) to the announcement date (day 0). Firm size is measured by the immanent logarithm of net sales. ***p b 0. 01, **pb0. 05, *pb0. 1. b 10 11 12 13 0. 045** ? 0. 022 0. 056*** 0. 039** 0. 024 ? 0. 050*** 0. clxx*** ? 0. 040** 1. 000 0. 257*** ? 0. 083*** 0. 252*** ? 0. 042** ? 0. 188*** ? 0. 098*** 0. 031* 0. 039** 0. 055*** 1. 000 ? 0. 382*** 0. 000 ? 0. 137*** ? 0. 206*** ? 0. 020 0. 199*** ? 0. 007 ? 0. 147*** ? 0. 064*** ? 0. 151*** 1. 000 0. 342*** 0. 017 0. 143*** 0. 151*** ? 0. 017 ? 0. 222*** . 009 0. 147*** 0. 068*** 0. 166*** ? 0. 960*** 1. 000 C. -F. Wang et al. / diary of external solicitude 17 (2011) 333347 prorogue 2 descriptive statistics and correlations. 341 342 C. -F. Wang et al. / journal of transnational Management 17 (2011) 333347 sidestep 3 irregular returns for new product introduction announcements. particular day Mean AR (%) t-statistic ? 10 ?9 ?8 ?7 ?6 ?5 ?4 ?3 ?2 ?1 0 ? 1,0 +1 +2 +3 +4 +5 +6 +7 +8 +9 + 10 ? 0. 023 ? 0. 005 0. 025 ? 0. 016 ? 0. 025 ? 0. 005 0. 047 0. 001 ? 0. 039 0. 093 0. 101 0. 194 ? 0. 038 0. 058 0. 081 ? 0. 056 0. 027 ? 0. 073 ? 0. 055 0. 053 ? 0. 025 ? 0. 054 ? 0. 450 0. 092 0. 471 ? 0. 309 ? 0. 477 ? 0. 099 0. 888 0. 003 ? 0. 731 1. 918* 2. 038** 2. 885*** ? 0. 756 1. 086 1. 329 ? 1. 138 0. 529 ? 1. 403 ? 1. 078 1. 118 ? 0. 471 ? 0. 972 (0. 653) (0. 927) (0. 638) (0. 758) (0. 633) (0. 921) (0. 375) (0. 998) (0. 465) (0. 055) (0. 042) (0. 004) (0. 450) (0. 278) (0. 184) (0. 255) (0. 597) (0. 161) (0. 281) (0. 264) (0. 638) (0. 331) ***p b 0. 01, **p b 0. 05. set in parentheses are p- set. international diversi? cation on auto (? 1, 0), we hold other control variables at the add up level. If the control variables are sens ones, we substitute these variables with their modes. 2 both ? gures provide supporting evidence for our hypotheses. First, the kind amongst international diversi? cation and the market value of NPIs is found to be inverted-U-shaped, with the vend positive at lower levels of international diversi? cation but negative at higher levels of international div ersi? cation. For example, in Fig. 1, for ? rms with no marketing might, at the initial stage, on that point is a positive adjoin on the market value of NPIs with an increase of 0. 62% in gondola car (? 1, 0) when the level of international diversi? cation increases from zero to 0. 8. beyond this doorway of 0. , a higher level of international diversi? cation is associated with a fall gondola (? 1, 0). In Fig. 2, for ? rms with no scientific capability, at that place is a positive impingement on the market value of NPIs with an increase of 0. 63% in gondola car (? 1, 0) when the level of international diversi? cation increases from zero to 0. 8. beyond this point, more international diversi? cation results in lower market values of NPIs. In addition, these graphs dilate the performance differences across ? rms with different levels of intangible assets. For example, in Fig. 1, for a ? rm with a pointedness of international diversi? cation of 0. and a level of marketing capability of 0. 3, in that respect is an pass judgment simple machine (? 1, 0) that is most 0. 89% higher than that for a ? rm at the homogeneous level of international diversi? cation but with the marketing capability of 0. 1 at a peak of international diversi? cation of 1. 2, there is an expect gain in auto (? 1, 0) of 3. 25% when the level of marketing capability increases from 0. 1 to 0. 3. The same(p) procedure can be used to explain the discuss effect of scientific capability. In Fig. 2, for a ? rm with a level of international diversi? cation of 0. 4 and a level of technology capability of 1. , there is an pass judgment machine (? 1, 0) that is 2. 09% higher than that for a ? rm at the same level of international diversi? cation but with the technological capability of 0. 4 at a degree of international diversi? cation of 1. 2, there is an expected improvement in machine (? 1, 0) of 4. 92% when the technology capability of a ? rm increases from 0. 4 to 1. 6. 5. treatment and conclusions This topic examines the grandeur of international diversi? cation in explaining the stock market reactions to NPI announcements. exploitation NPI announcements from the period 19972005, we found an inverted-U-shaped kin between international diversi? ation and the market value of NPIs, with a slope positive at lower levels of international diversi? cation but negative at higher levels of international diversi? cation. This birth is moderated by the intangible assets possess by internationally diversi? ed ? rms. We ? nd that announcing ? rms with greater technological and/or marketing capabilities achieve higher perverted returns from NPIs. The main effects of the international diversi? cation variables still hold after the comprehension of these chair factors. In view of young research having suggested a sigmoid performance effect of internationalisation (Contractor et al. 2003 Lu and Beamish, 2004), we test our hypotheses in the framework of an S-shaped relationship by simultaneously adding linear, shape and cubed terms of international diversi? cation in the regression. However, our sample does not reveal the S-shaped association between international diversi? cation and the market value of NPI. 12 The equations for the graphs presented in Figs. 1 and 2 are as follows, separately cable car (? 1, 0) = ? 0. 0037 + 0. 0157 * ID ? 0. 0099 * ID2 ? 0. 0147 * AD + 0. 1476 * ID * AD and cable car (? 1, 0) = ? 0. 0049 + 0. 0168 * ID ? 0. 0112 * ID2 + 0. 0056 * RD + 0. 295 * ID * RD, where ID = international diversi? cation ID2 = transnational diversi? cation form AD = advertising inspiration RD = R&D intensity. C. -F. Wang et al. / Journal of world-wide Management 17 (2011) 333347 343 Table 4 lapse analysis of new product introduction on international diversi? cation. Un-centered results touch results single-handed variables seat 1 homunculus 2 solicit ? 0. 0005 (? 0. 072) ? 0. 0042 ? 0. 0017 ? 0. 0037 ? 0. 0009 (? 0 . 591) (? 0. 233) (? 0. 525) (? 0. 122) 0. 0178 0. 0157 0. 0168 0. 0143 (3. 156)*** (2. 737)*** (2. 967)*** (2. 486)** ? 0. 0099 ? 0. 0099 ? 0. 0112 0. 0113 (? 2. 188)** (? 2. 175)** (? 2. 434)** (? 2. 455)** external diversi? cation outside(a) diversi? cation square external diversi? cation ? advertising intensity external diversi? cation ? R&D intensity Firm size a Debt-to-asset ratio production diversi? cation denote intensity R&D intensity Newness quadruple epoch perseverance R&D intensity assistant Manufacturing familiarized R2 F value publication of observations a put 3 homunculus 4 0. 1476 (2. 236)** ? 0. 0001 ? 0. 0002 (? 0. 336) (? 0. 484) 0. 0072 0. 0071 (1. 531) (1. 516) ? 0. 0001 0. 0000 (? 0. 069) (0. 037) 0. 0667 ? 0. 0147 (2. 100)** (? 0. 04) 0. 0090 0. 0087 (1. 878)* (1. 832)* ? 0. 0003 ? 0. 0002 (? 0. 182) (? 0. 138) 0. 0016 0. 0016 (1. 085) (1. 055) ? 0. 0007 ? 0. 0006 (? 0. 466) (? 0. 407) ? 0. 0034 ? 0. 0032 (? 1. 804)* (? 1. 686)* 0. 0020 ? 0. 0007 ( 0. 032) (? 1. 121) ? 0. 0005 ? 0. 0015 (? 0. 079) (? 0. 252) 0. 0051 0. 0064 2. 20*** 2. 41*** 3061 3061 simulation 6 0. 0036 (0. 637) 0. 1629 (2. 458)** 0. 0295 0. 0003 (0. 676) 0. 0073 (1. 569) ? 0. 0009 (? 0. 744) 0. 0527 (1. 673)* 0. 0093 (1. 941)* ? 0. 0004 (? 0. 195) 0. 0017 (1. 141) ? 0. 0006 (? 0. 389) ? 0. 0018 (? 0. 977) ? 0. 0030 (? 0. 519) ? 0. 0012 (? 0. 218) 0. 0005 1. 15 3061 place 5 forge 7 Model 8 Model 9 0. 0022 0. 0032 0. 0030 0. 0042 (0. 392) (0. 567) (0. 517) (0. 726) 0. 0178 0. 0174 0. 0192 0. 0189 (3. 156)*** (3. 081)*** (3. 375)*** (3. 326)*** ? 0. 0099 ? 0. 0099 ? 0. 0112 ? 0. 0113 (? 2. 188)** (? 2. 175)** (? 2. 434)** (? 2. 455)** 0. 1476 (2. 236)** 0. 0333 (1. 978)** (2. 225)** ? 0. 0001 ? 0. 0002 (? 0. 257) (? 0. 410) 0. 0085 0. 0086 (1. 803)* (1. 824)* ? 0. 0001 0. 0000 (? 0. 102) (0. 012) 0. 0709 ? 0. 0185 (2. 226)** (? 0. 383) 0. 0056 0. 0049 (1. 107) (0. 971) ? 0. 0002 ? 0. 0001 (? 0. 109) (? 0. 051) 0. 0018 0. 0018 (1. 221) (1. 2061) ? 0. 0009 ? 0 . 0009 (? 0. 641) (? 0. 99) ? 0. 0046 ? 0. 0046 (? 2. 341)** (? 2. 302)** ? 0. 0005 ? 0. 0016 (? 0. 082) (? 0. 265) ? 0. 0015 ? 0. 0027 (? 0. 252) (? 0. 463) 0. 0060 0. 0077 2. 33*** 2. 58*** 3061 3061 0. 1629 (2. 458)** 0. 0295 0. 0003 (0. 676) 0. 0073 (1. 569) ? 0. 0009 (? 0. 744) 0. 0527 (1. 673)* 0. 0093 (1. 941)* ? 0. 0004 (? 0. 195) 0. 0017 (1. 141) ? 0. 0006 (? 0. 389) ? 0. 0018 (? 0. 977) ? 0. 0003 (? 0. 519) ? 0. 0012 (? 0. 218) 0. 0005 1. 15 3061 Model 10 (1. 978)** ? 0. 0001 ? 0. 0002 ? 0. 0001 (? 0. 336) (? 0. 484) (? 0. 257) 0. 0072 0. 0071 0. 0085 (1. 531) (1. 516) (1. 803)* ? 0. 0001 0. 0000 ? 0. 0001 (? 0. 069) (0. 37) (? 0. 102) 0. 0667 0. 0817 0. 0709 (2. 100)** (2. 517)** (2. 226)** 0. 0090 0. 0087 0. 0249 (1. 878)* (1. 832)* (2. 659)*** ? 0. 0003 ? 0. 0002 ? 0. 0002 (? 0. 182) (? 0. 138) (? 0. 109) 0. 0016 0. 0016 0. 0018 (1. 085) (1. 055) (1. 221) ? 0. 0007 ? 0. 0006 ? 0. 0009 (? 0. 466) (? 0. 407) (? 0. 641) ? 0. 0034 ? 0. 0032 ? 0. 0046 (? 1. 804)* (? 1. 686)* (? 2. 341)** 0. 0020 ? 0. 0007 ? 0. 0005 (0. 032) (? 1. 121) (? 0. 082) ? 0. 0005 ? 0. 0015 ? 0. 0015 (? 0. 079) (? 0. 252) (? 0. 252) 0. 0051 0. 0064 0. 0060 2. 20*** 2. 41*** 2. 33*** 3061 3061 3061 0. 0333 (2. 225)** ? 0. 0002 (? 0. 410) 0. 0086 (1. 824)*