A cross‐national study of the relationship between international diversification and new product performance

Abstract Does multinational expansion affect product innovation performance? If so, does such a relationship between international diversification and performance vary depending upon the size of the firm? Focusing on the learning and experiential advantages associated with international diversification, we attempt to find answers to these critical questions from a cross‐national perspective. Based on a survey of 179 US and 250 Chinese firms, we find that international markets are important for both US and Chinese firms, but to a greater extent among US firms. The results also indicate that new product performance can vary significantly depending upon international diversity. While US firms can generally expect better new product performance with a growing level of international diversification, Chinese firms may experience deteriorating performance after a certain threshold level. Finally, the firm size effects appear to be significant among Chinese firms, but not in the US sample.