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Title:
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Commitment, Product Market Diversity, and Performance
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|
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An Intraindustry Analysis |
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Author:
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Knudsen, Thorbjørn; Eriksen, Bo |
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Abstract:
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Previous empirical diversification research has largely ignored the combined effect of inputand
output diversity as drivers of financial performance. In view of this gap, the present paper
provides an empirical analysis of the link between intraindustry commitment, diversity of the
firm’s product market portfolio and performance. We suggest that commitment constrains the
ability to diversify, and that product market diversity can be evaluated with respect to the
extent that increases in diversity lead to increases in coordination costs. Our results suggest
that commitment to physical assets and technology choice drives product and product line
diversity. Furthermore, financial performance increases in product diversity and tends to
decrease in the number of product lines. |
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URI:
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http://hdl.handle.net/10398/6896
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Date:
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2004-03-23 |
This work is licensed under a Creative Commons License.
