AMERICAN JOURNAL OF MANAGEMENT
Curvilinear Relationship between Diversification and Performance: A Replication and Extension of Previous Research
Author(s): Phil Stetz, Elton Scifres
Citation: Phil Stetz, Elton Scifres, (2018)"Curvilinear Relationship between Diversification and Performance: A Replication and Extension of Previous Research," American Journal of Management, Vol. 18, Iss. 1, pp. 84-99
Article Type: Research paper
Publisher: North American Business Press
Abstract:
As argued in most strategic management textbooks, the relationship between diversification and
performance is curvilinear and firms pursuing a related diversification strategy outperform those firms
pursuing a dominant or an unrelated diversification strategy. Using SAS modeling techniques and
controlling for industry, corporate and business unit effects new insights were gleaned with regards to the relationship between diversification and performance. The implications to performance (statistical
significance), given the type and extent of diversification strategies, are discussed resulting in a deeper
understanding of how the complex relationships between performance and diversification play out across the entire diversification spectrum.