The Diversification Effects on the Freight Forwarding Industry

Abstract

In this thesis, I review and discuss empirical studies that examine how a firm’s international and product diversification affects their performance. Many of the studies find inconsistent relationships. This is due to the variety of industries studied. Most studies were conducted with data from manufacturing firms. I will test a unique service sector, the freight forwarder. I hypothesize and confirm the relationship between a service firm’s multinationality and performance is an inverted ‘U’ much like in manufacturing. The research provides an explanation that international and service expansion increases performance, but only to a certain point where the relationship reverses.