The Performance Implications of Related and Unrelated Within-Industry Diversification
Type
conference paper
Date Issued
2011-11-06
Author(s)
Abstract
Different from previous literature on cross-industry diversification, this study investigates the performance implications of multiunit firms’ related and unrelated diversification within a single industry. Results of the world’s leading retail firms’ unit (i.e., retail format) diversification behavior over thirteen years (from 1997 to 2009) show that profits first decrease at low levels of relatedness and then increase at an increasingly higher level as corporate parents focus stronger on related within-industry diversification. Moreover, we find suggestive evidence that unrelated within-industry diversification has a negative effect on profits. Finally, the study indicates that especially related diversifiers who exceed a distinct (minimum) level of related within-industry diversification are able to develop capabilities over time that lead to superior firm performance.
Language
English
Keywords
Diversification Strategy
Relatedness Construct
Retailing Industry
HSG Classification
contribution to scientific community
Refereed
Yes
Book title
Strategies for a Multi-Polar World
Publisher
SMS Strategic Management Society
Publisher place
Chicago
Event Title
31st Strategic Management Society (SMS) Annual International Conference
Event Location
Miami, FL
Event Date
06.-09.11.2011
Subject(s)
Division(s)
Eprints ID
205857