Innovation, Geographical Diversification and Tax Incentives: Impacts on Financial Performance – A Theoretical Perspective

Objective: The objective of this study is to analyze the relationship between geographic diversification, innovation, and tax incentives, seeking to understand how these factors interact and influence the financial performance of companies. Theoretical Framework: Based on the Resource-Based View (RBV), contingency, and internationalization theories, this study examines the inconsistencies in the literature on the relationship between geographic diversification and financial performance. The lack of analyses that consider contingency factors and innovation efforts has made it difficult to understand this interrelationship. Companies located in less developed regions face additional challenges, requiring greater allocation of their own resources for innovation, while those located in more developed regions benefit from tax incentives. Method: The methodology adopted integrates multidisciplinary approaches, incorporating organizational and regional factors. The study proposes a theoretical framework to clarify the relationship between innovation, location, and tax incentives, analyzing how these elements affect corporate financial performance. Results and Discussion: The findings indicate that geographic diversification, when associated with favorable economic environments, drives regional development. Furthermore, tax incentives play a crucial role in fostering innovation and strengthening the financial performance of companies. Research Implications: This study provides theoretical and practical contributions by demonstrating the importance of innovation and tax incentives in organizational performance. The results can assist managers and policymakers in assessing environmental contingencies, attracting investment, and formulating strategies aimed at economic growth, job creation, and improving the quality of life. Originality/Value: By integrating contingency factors into the analysis of the relationship between geographic diversification, innovation, and financial performance, the study contributes to the literature by highlighting the impact of the regional environment and public policies on business strategies. These findings are relevant for investors and economic agents interested in formulating policies that promote innovation and sustainable development.