The impact of product diversification and capital structure on firm performance: evidence from Vietnamese manufacturing enterprises

Abstract

This study examines the influence of product diversification (PD) and capital structure on firm performance in a transitional economy. Ownership structure has been considered as one of the critical factors impacting the efficiency of diversification strategies. However, few studies have investigated the effect of export orientation and ownership structure on PD strategies within the manufacturing sector in emerging markets such as Vietnam. Utilising a dataset on Vietnamese manufacturing enterprises from 2007 to 2015 generated by Vietnam General Statistics Office, the paper investigates the impact of PD on company performance within various capital structure types such as state-owned enterprises, private companies, corporations, and foreign direct investment (FDI) enterprises. We conclude that private companies and corporations are more likely to engage in and reap benefits from PD strategies while other types of enterprises appear to be less likely to engage in PD and, therefore, lag in attaining higher levels of advantage. Copyright © 2019 Inderscience Enterprises Ltd.