Firm Diversity: Conceptualization and Measurement

Abstract

Two fundamentally different ways of conceptualizing and measuring firm diversity—by business count and by strategy—are identified, their strengths and weaknesses discussed, and their suitability for investigating commonly asked questions evaluated. A business count measure is claimed to be suitable for research comparing diversified and nondiversified firms but not for investigating differences among diversified firms. For the latter task, a strategic measure of diversity is recommended.