Diversification Strategies and Economic Performance

This chapter analyzes the differences in economic performance that are due to diversification strategies by taking into consideration the influence of various other factors aside from strategy. The chapter reviews a number of studies in the fields of economics and management. It conducts an empirical analysis of the relationship between diversification strategy and economic performance. The chapter analyzes the relationship between diversification strategy and economic performance from the standpoint of the contingency of strategy. It presents analysis of the relationship between diversification routes and economic performance. A number of hypotheses have been put forward in economics and management science regarding the relationship between a firm’s diversification activities and its economic performance. Market power is the controlling power a company possesses in the specific market in which it operates. Adaptability to market change refers to a firm’s ability to alter its product portfolio appropriately in response to the changing market environment.