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　Prior studies document positive relationship between international diversification (ID) and innovation. Their findings evidence the ID-enhanced quantity of innovative outputs. In addition to past empirical findings, this research tries to provide extra evidence in another perspective, where market reactions to new product announcements used as proxy of innovation were investigated to explore the wealth effect of ID on innovative product performance. Event-study methodology is employed to conduct a thorough examination of the announcements of these groundbreakings. Data of 330 new product announcements made by 160 companies over 4 years (1997-2000) show a consistent U-shaped relationship between ID and innovation. Moreover, this research finds that R&D intensity and technology opportunity have upbeat moderating effect on this relationship. The results of this study provide evidence of the importance of R&D intensity and technology opportunity for creating competitive advantage but also advocate the costs associated with the development of these advantages.

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