Corporate Diversification, TMT Experience and Performance : Evidence from German SMEs

We investigate the effect of product diversity and geographic diversity on the performance of SMEs. We propose an inverted U shaped relationship between product (geographic) diversification (PD/GD) and the performance of SMEs. We also propose that PD and GD positively interact with each other to affect the SME performance. Further, we utilized the upper echelons literature to suggest that the effect of corporate diversification on performance is contingent on the TMT experience. Our findings, based on a panel data of 3,692 firm-year observations support our arguments