Date of Award

Spring 2000

Document Type


Degree Name

Doctor of Philosophy (PhD)


Business Administration-Strategic Management

Committee Director

Kae Chung

Committee Member

J. Taylor Sims

Committee Member

James Johnson

Committee Member

Kiran Karande


Services currently account for the dominant share of the workforce in all developed nations and are the fastest growing sector of employment in most developing nations. Services comprise approximately two-thirds of the GDP (gross domestic product) or total domestic output of final goods and services in highly industrialized nations from the OECD (Organization for Cooperation and Development). They make up almost half of the GDP in developing nations. All economic forecasts predict that services will continue to grow and account for the vast majority of future economic expansion throughout the world. Despite these facts, services have been studied infrequently among management scholars. This neglect stems from an historical lack of available data on services. However, recent advances in technology have made their study feasible. The major theories of the firm have been developed using manufacturing enterprises, and so may not be applicable to services. Similarly, most empirical work in the business literature uses manufacturing data. This dissertation attempts to fill this void in the literature.

Much of the research in management has focused on finding variables that account for performance (Christensen and Montgomery, 1981; Hambrick and Mason, 1984; Hanson and Wernerfelt, 1989). Performance has been a popular topic because it is necessarily a consequence of strategy, and because performance typically is the key objective or goal that defines strategy. Therefore, academics have looked to strategies to account for performance. Among these are international diversification and product diversification. Many researchers have linked these terms, including Miller and Pras (1980), Grant, Jammine and Thomas (1988), Kim, Hwang and Burgers (1989) and Geringer, Beamish and daCosta (1989). However, no definitive relationships have been discovered. This work continues this stream of research while focusing on services. Specifically the relationships between international diversification, product diversification and performance observed among manufacturing firms by Hitt, Hoskisson and Kim (1997) are tested for U.S. service firms. The results show that the curvilinear line between international diversification and performance which is moderated by product diversification was not observed for services. This may be due to the differences between goods and services, which have been noted by a number of marketing scholars (Zeithaml, Parasuraman and Berry, 1990; Lovelock, 1983; Gronroos, 1990). To extend the analysis, the relationship between international diversification, product diversification and risk was also analyzed. Based on previous work a U-shaped curve was anticipated between international diversification and risk, which was moderated by product diversification. Interestingly, evidence of an inverted U-shaped curved line between international diversification and risk was found. The implications of these findings are given for managers and academics. Suggestions for future research are also provided.