Multinationality, Product Diversification, and Profitability of Emerging Us Small- and Medium-Sized Enterprises

An empirical examination is conducted of individual and joint effects of two variables—multinationality and product diversification—on profit performance for a sample of emerging small- and medium-sized enterprises (SMEs). Data was gathered from 71 emerging small- and medium-sized manufacturing enterprises selected from the Hoover’s Handbook of Emerging Companies. The results indicate that the two variables and performance are positively related up to a point, after which further increase in multinationality and product diversification is associated with declining performance. These findings suggest that firms should consider optimal levels of markets. Findings also demonstrate that research and development (R&D) expenditure and debt level contribute significantly to profit performance. (SFL)