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The link between product diversification and performance among Spanish manufacturing firms: Analyzing the role of firm size
Author(s) -
BenitoOsorio Diana,
Colino Alberto,
ZúñigaVicente José Ángel
Publication year - 2015
Publication title -
canadian journal of administrative sciences / revue canadienne des sciences de l'administration
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.347
H-Index - 48
eISSN - 1936-4490
pISSN - 0825-0383
DOI - 10.1002/cjas.1303
Subject(s) - unobservable , diversification (marketing strategy) , endogeneity , sample (material) , panel data , industrial organization , product (mathematics) , economics , business , econometrics , marketing , mathematics , chemistry , geometry , chromatography
This study sheds additional light on the product diversification‐performance relationship for firms in a country having recently attained an advanced economy status in our period of analysis. We assume there will be an inverted U‐shaped relationship and use a sample of small, medium, and large Spanish manufacturing firms between 1994 and 2008. Our findings provide solid support for this assumption, and are identical when the sample consists of small, medium, and large firms and of large firms alone. Our results also suggest that the larger the firm, the higher the optimal level of diversification. Panel data models are used to control for unobservable heterogeneity and potential endogeneity problems. Copyright © 2015 ASAC. Published by John Wiley & Sons, Ltd.