Diversification strategy and profitability | Zendy

Rumelt Richard P. | Zendy

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Diversification strategy and profitability

Author(s) -

Rumelt Richard P.

Publication year - 1982

Publication title -

strategic management journal

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 11.035

H-Index - 286

eISSN - 1097-0266

pISSN - 0143-2095

DOI - 10.1002/smj.4250030407

Subject(s) - profitability index , diversification (marketing strategy) , industrial organization , business , economics , econometrics , marketing , finance

Prior work has shown an association between diversification strategy and profitability. This paper replicates that association using more recent and complete data and goes on to investigate the sources of the association. Theoretical arguments are advanced which predict the association which will remain once the effects of varying industry profitability are removed. Empirical tests verify this prediction and permit the discrimination between the effects of industry and diversification strategy on profitability.

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