The Journal of Global Business Issues – Volume 4 Issue 1 17 The Relationship between International Diversification and Global Brand Value: Is It Linear? One Way? Country-of-Origin Dependent? Jin-Woo Kim, University of Texas at Arlington ABSTRACT The study addresses three questions: Is the relationship between firms’ internationalization and global brand value linear or non-linear? Is higher global brand value associated with higher diversified opera- tion and vice versa? Is the relationship between higher global brand value and international diversifica- tion more salient in case of U.S. companies? In order to find answers to these questions, the authors in- vestigate the association between global market expansion and global brand power. The study provides evidence that the two variables mutually benefit each other. Although there is an unclear association between internationalization and global brand value in non-U.S. companies, U.S. companies may hurt their global brand value when they try to increase their diversification. Global brand value can drive firms to diversify international operations, but it cannot always boost market expansion. Compared to non-U.S. firms, U.S. companies generate a non-linear relationship between global brand and interna- tional diversification and vice versa. The findings indicate that the relationship between foreign sales ratio and global brand value is significant. In the results, global brand value is positively related to in- ternational diversification, indicating that higher global brand value results in more diversified interna- tional operations. Introduction A firm’s survival is increasingly becomes becoming more dependent on its ability to cope with the high levels of complexity in global com- petition (Sanders and Carpenter 1998). Market globalization drives firms to pursue for achieving efficiency in terms of current operations, manag- ing risks, and innovation learning innovation and adaptation (Ghoshal 1987). International diversification can be considered an alternative way of expanding competitive advantages and the market basis at a marginal cost. In this stream, prior research has ad- dressed the nature of the drivers and outcomes of internationalization. The international diver- sification performance literature has been domi- nated by accounting-based measures such as ROA (return on asset), Tobin’s Q, ROE (return on equity), ROI (return on investment), and ROS (return on sales) (Lu and Beamish 2004; Thomas 2006). Little attention has been paid to uncovering the issues related to the synergy ef- fect or mutually beneficial relationship between international operations and firms’ intangible marketing assets. Motivated by this research gap, this study strives to link international operation is- sues to marketing variables by examining the mutual relationship between the degree of inter- nationalization and global brand value. Based on a literature review, a conceptual framework is developed and empirical testing is conducted to examine the mutual relationship between inter- national diversification and global brand equity. Then, a discussion about research findings and their implication is followed by the empirical study conducted in this research. Background and Research Interests The current study addresses intangible marketing asset as a driver and an outcome of geographical market expansion. The authors investigate the mutual relationship between the degree of internationalization of firms and global brand value. This section provides theoretical background for the research model, which links international diversification to global brand value and vice versa. Global Brands as an Outcome of Interna- tional Diversification Outcomes of international diversifica- tion have mainly been measured by the account- ing performance index. Characteristics of inter- national diversification can moderate the rela- tionship between drivers and outcomes of inter- national diversification. Other environmental factors and organizational characteristics may influence organizations’ performance when it