The impact of international diversification on credit scores: Evidence from the UK |
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| Institution: | 1. Swansea University, United Kingdom;2. International Business School Suzhou, Xi''an Jiaotong-Liverpool University, 8 Chongwen Road, Suzhou, 215123, China;3. DAN Department of Management and Organizational Studies, The University of Western Ontario, Canada;4. University of Aberdeen Business School, King’s College, University of Aberdeen, United Kingdom;5. School of Marketing and Communication, University of Vaasa, Finland;6. University of Kent, Canterbury, CT2 7FS, United Kingdom;1. Adam Smith Business School, University of Glasgow, Glasgow G12 8QQ, UK;2. School of Management, University of Bath, Bath, UK;3. Adam Smith Business School, University of Glasgow, Glasgow G12 8QQ, UK;4. School of Economics & Finance, University of St Andrews, The Scores, St Andrews KY16 9AR, UK,;1. Bristol, North Somerset and South Gloucestershire Clinical Commissioning Group, UK National Health Service, Bristol, UK;2. Institute for Risk and Disaster Reduction, University College London, London, UK;3. Centre for Healthcare Improvement and Innovation, School of Management, University of Bath, Bath, UK;1. Arison School of Business, The Interdisciplinary Center, Herzliya, Israel;2. Alliance Manchester Business School, The University of Manchester, Manchester, United Kingdom;3. Centre for International Business, Leeds University Business School, University of Leeds, Leeds, United Kingdom;1. University of Aberdeen Business School, King''s College, Aberdeen, AB24 5UA, United Kingdom;2. Western University, London, ON N6A 3K7, Canada;1. School of Management, Zhejiang University, Hangzhou, 310058, China;2. Cardiff University Business School, Aberconway Building, Colum Drive, Cardiff, CF10 3EU, United Kingdom;3. Leeds University Business School, Maurice Keyworth Building, University of Leeds, Leeds, West Yorkshire, LS2 9JT, United Kingdom |
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| Abstract: | Despite the great deal of previous research into international diversification, we know little about the impact of international diversification on firms’ credit scores. Drawing upon the resource-based view and transaction cost economics, we examine the relationship between international diversification and credit scores by using a large sample of 6,557 UK firms between 2016 and 2017. We find an inverted U-shaped relationship between international diversification and firms’ credit scores, indicating that the effect of international diversification on credit scores is initially positive but becomes negative with over-diversification. In addition, we find that R&D intensity positively moderates the relationship between international diversification and credit score, implying that the credit scores of highly diversified firms improve as they increase their investment in R&D. Further analysis suggests that a firm’s credit score becomes less dependent on international diversification for large firms, firms in concentrated industries, firms in the manufacturing sector, and firms distant from key metropolitan areas, such as London. |
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| Keywords: | International diversification Credit score Innovation Competition Exporting firm SMEs |
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