Diversification strategy determines both the scope of a firm's activities and the logic of portfolio composition. It is a cornerstone of corporate strategy, and, according to prevailing theory, it is of paramount relevance for performance.

Frithjof Pils presents an overview of the empirical research on the linkage between diversification strategy and performance. The author uses multiple methods of quantitative meta-analysis and examines the nature of the relationships between diversification strategies and accounting-based, market-based, and growth-based performance. Subsequently, he applies multiple methods of empirical data analysis on a dataset of 350 multi-business firms to express the diversification discount and other measures of performance as a function of different types of business relatedness and core business industry. Ultimately, a two-dimensional model of the relatedness construct that comprises relatedness at the strategic level as well as at the operational level is derived. Based on the results, the author shows implications for the interpretation of past research, the design of future research including the use of meta-analysis methodologies, as well as management practice.

Autorentext

Dr. Frithjof Pils promovierte bei Prof. Dr. Andreas Bausch am Lehrstuhl für Strategic Management and Controlling (European Utility Management) an der Jacobs University, Bremen. Er ist als Unternehmensberater bei The Advisory House tätig.

Inhalt
Research Problems, Objectives, and Structure.- Meta-Analysis on the Relationship between Diversification and Performance.- Types of Operational Relatedness, Core Business Industry,and Performance.- A Two-Factor Model of Operational Relatedness and Strategic Relatedness.- Summary.