International and product diversification

Abstract

PurposeThe aim of this paper is to investigate how e‐commerce may influence international and product diversification.Design/methodology/approachThe current study elaborates the importance of resource‐based and resource dependence theory to illustrate how internal and external resources may enable firms to diversify. Prior studies on resource‐based theory, resource dependence theory, international diversification, product diversification, and IT capabilities have been presented to show gaps in the literature and identify avenues for future research.FindingsThis paper has established a theoretical perspective on the importance of external resources or infrastructure, as well as firm‐specific capabilities, on encouraging product and international diversification. A model has been developed and propositions given.Research limitations/implicationsFuture studies on this topic will need to empirically test the model given in this paper, in order to manage all of the interconnected variables and mediators developed in this study.Practical implicationsUtilization of the internet may provide a means for firms to offer “one‐stop shopping” for customers, and may even encourage firms to diversify internationally. Furthermore, important firm‐specific IT capabilities of financial services firms may be extended geographically and by product line, and combined with utilization of the internet, may improve firm performance.Originality/valueThis study compares and contrasts the role of internal and external resources, and assesses whether they will demonstrate a greater effect upon international or product diversification.