Association between corporate diversification strategies and inventory performance: a firm-level investigation

Purpose: This research aims to empirically investigate the impacts of product and international diversification strategies on firm-level inventory performance. Design/methodology/approach: This study empirically examines the associations between product and international diversification strategies and inventory performance based on a sample of 64,124 observations across 7,367 US publicly traded firms between 1989 and 2019 from the COMPUSTAT Segment, Fundamental Annual and Fundamental Quarterly data files. We employ both linear and nonlinear regression models to perform our empirical analysis. Findings: This research provides strong evidence that there exists a U-shaped relationship between unrelated product diversification and inventory level and a partially inverted U-shaped relationship between international diversification and inventory level. We also find a positive impact of related product diversification on inventory level, but there is no significant curvilinear relationship between related product diversification and inventory level. Practical implications: Our research findings offer important insights into top management’s strategic planning for diversification strategies and operations manager’s inventory control policies to achieve the strategic fit between corporate diversification and inventory management. Originality/value: Product and international diversification strategies not only play an essential role in the firm’s competitive advantage, but also have a significant influence on operations manager’s inventory decision. This research is among the first to systematically investigate how top management’s related product, unrelated product and international diversification strategies may have complex nonlinear impacts on inventory performance.

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Work Title Association between corporate diversification strategies and inventory performance: a firm-level investigation
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Open Access
Creators
  1. Zhuang Qian
  2. Charles X. Wang
  3. Haiying Yang
License In Copyright (Rights Reserved)
Work Type Article
Publisher
  1. International Journal of Operations and Production Management
Publication Date March 29, 2024
Publisher Identifier (DOI)
  1. https://doi.org/10.1108/ijopm-03-2023-0199
Deposited December 01, 2024

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  • Added Creator Zhuang Qian
  • Added Creator Charles X. Wang
  • Added Creator Haiying Yang
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