Footnote:
In: ESIC Market Economic and Business Journal, Vol. 140, pp. 127-156, September-December 2011
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments 2011 erstellt
Description:
he concept of corporate diversification reflects a dual approach, by product and geography, both more and more frequent and relevant for business activity, but developing separately in academic literature. The purpose of the present paper is to analyze jointly the impact of product diversification strategies, whether or not related, and the effect geographical diversification may have on the profitability of Spanish multinationals. Although the results have not provided evidence for geographical diversification, they have highlighted a novel flat S shape in the relationship between the degree of relatedness in product diversification and business profitability. In general, a closer degree of relatedness in products has a positive effect on profitability by allowing economies of scale to be exploited better, reducing transaction costs and facilitating learning. However, for extreme values, an increase in the degree of unrelated diversification may also be beneficial if the costs of co-ordinating activities are avoided and opportunities for accessing new sources of knowledge are taken advantage of