Impacts of geographic diversification on restaurant firms’ risk: Domestic vs. international diversification |
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| Institution: | 1. School of Sport, Tourism and Hospitality Management, Temple University, Philadelphia, PA, USA;2. School of Hotel, Restaurant, and Tourism Management, University of South Carolina, Columbia, SC, USA;1. Oregon State University, 200 Bexell Hall, Corvallis, OR 97331, United States;2. West Chester University, 305 Anderson Hall, West Chester, PA 19383, United States;1. Department of Human Sciences, The Ohio State University, Columbus, OH, USA;2. School of Sport, Tourism and Hospitality Management, Temple University, PA, USA;3. Institute of Service Science, National Tsing Hua University, Hsinchu, Taiwan;1. Department of Tourism Management, Gachon University, Seongnam-si, South Korea;2. School of Hospitality Management, Penn State University, PA, USA;3. School of Sport, Tourism and Hospitality Management, Temple University, PA, USA;1. Ecole hôtelière de Lausanne, HES-SO //, University of Applied Sciences Western Switzerland, Route de Cojonnex 18, 1000, Lausanne 25, Switzerland;2. The University of Queensland, UQ Business School, Brisbane, QLD 4072, Australia;3. Cornell University, School of Hotel Administration, Ithaca, NY, United States;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 |
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| Abstract: | In the hospitality context, the diversification literature has evolved to mostly focus on the impact of diversification on firm performance. However, without accounting for risk, the effect of diversification on firm value likely provides an incomplete picture. Therefore, this study investigates the influence of domestic and international geographic diversification on restaurant firms’ risk. This study uses the Berry-Herfindahl Index to measure the degree of domestic and international geographic diversification. Findings show a non-linear relationship between geographic diversification and restaurant firms’ risk. However, different shapes of the non-linear relationship are revealed between domestic and international geographic diversification and between operational and market-based risk. The results of this study indicate that the risk-reduction effects argued from the modern portfolio theory may be partially applicable to the geographic diversification for restaurant firms, suggesting a different view toward financial diversification and corporate diversification. |
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| Keywords: | Geographic diversification Domestic diversification International diversification Market-based risk Operational risk |
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