Mode of Corporate Diversification and Economic Performance

Abstract

In this article the authors discuss research they conducted on the diversification strategies used by multibusiness corporations. Two of the strategies that they identify include internal diversification that relies on the development of products or services and external diversification that relies on the acquisition of other firms. They hypothesized that multibusiness firms diversify into new business by using one of these two methods while avoiding mixing of the two strategies and that corporations that do mix strategies experience lower economic returns than corporations that avoid this method.