Country Resource Environments, Firm Capabilities, and Corporate Diversification Strategies*

Abstract

ABSTRACT Environmental differences among countries are often assumed away in strategy research. In particular, the unique contexts of the emerging economies have not been considered adequately in extant research. I bring country environmental contexts to the foreground and conceptualize various types of economies (developed economies, emerging economies, institution‐driven high growth emerging economies, and factor‐driven high growth emerging economies) as dissimilar types of country resource environments that provide firms with country resources: factors and institutions. To compete successfully, firms will find it more optimal to emphasize appropriate firm capabilities (market capabilities and non‐market capabilities) and corporate diversification strategy (product and international diversification). By integrating insights from institutional economics and resource‐based view, this paper offers a conceptual framework to examine the multifaceted relationships linking firm capabilities and corporate diversification across dissimilar country resource environments.

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