Internationalization and firm performance of Indian firms: Does product diversity matter?

The purpose of this study is to investigate the relationship between internationalization and firm performance and to determine the moderating role of product diversity on this relationship. This study utilizes secondary financial data of 180 Indian manufacturing firms obtained from CMIE PROWESS and pertains to a period of five years. Correlation analysis has been used to make an initial investigation of whether the variables present certain problems of multicollinearity. Pooled Cross-Section/Time-Series regression analysis has been used to test the aforementioned relationships. Results of this study confirm a U-shape relationship between internationalization and firm performance and a significant negative effect of product diversity on firm performance. In addition, results indicate that product diversity strengthens the relationship between internationalization and performance.