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On the measurement of corporate diversification strategy: Evidence from large U.S. service firms
Author(s) -
Nayyar Praveen R.
Publication year - 1992
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.4250130305
Subject(s) - diversification (marketing strategy) , business , industrial organization , marketing , service (business) , economics
Abstract Actual, not potential, relatedness determines the results of diversification strategies. An external examination of a firm's businesses, products, markets and technologies permits an assessment of potential relatedness among its various businesses. Potential relatedness is, however, often not realized. Also, relatedness may be externally invisible. Hence, actual relatedness may diverge from externally measured potential relatedness. This paper provides evidence suggesting that measures of corporate diversification strategy based on internal data differ significantly from those based on externally available data.