Examining Curvilinearity and Moderation in the Relationship between the Degree of Relatedness of Individual Diversification Actions and Firm Performance

Description:

Corporate diversification continues to be an important phenomenon in the modern business world. More than thirty years of research on diversification suggests that the degree of relatedness among a firm's business units is a factor that can affect firm performance, but the true effect of diversification relatedness on firm performance is still inconclusive. The purpose of this dissertation is to shed more light on this inconclusive association. However, attention is focused on the performance implications of individual diversification actions (e.g., acquisitions and joint ventures) rather than on the overall performance of firms with different levels of diversification. A non-experimental, longitudinal analysis of secondary data was conducted on over 450 unique acquisitions and on more than 210 joint ventures. Results suggest that even when individual diversification actions rather than entire business portfolios are examined, an inverted curvilinear association between diversification relatedness and performance is likely to emerge. This pattern is observed in both acquisitions and joint ventures. However, the association between diversification relatedness and performance in acquisitions is moderated by the level of industry adversity, though factors such as corporate coherence and heterogeneous experience do not moderate the association between diversification relatedness and performance. This study augments the body of knowledge on diversification and adds refinement to the traditional curvilinear finding regarding relatedness. By studying acquisitions and joint ventures independently, the results reveal differences in both slope and inflection points that suggest the relative impact of relatedness may vary depending on the mode of diversification.

Creator(s): Cernas Ortiz, Daniel Arturo
Creation Date: May 2011
Partner(s):
UNT Libraries
Collection(s):
UNT Theses and Dissertations
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Publisher Info:
Publisher Name: University of North Texas
Place of Publication: Denton, Texas
Date(s):
  • Creation: May 2011
Description:

Corporate diversification continues to be an important phenomenon in the modern business world. More than thirty years of research on diversification suggests that the degree of relatedness among a firm's business units is a factor that can affect firm performance, but the true effect of diversification relatedness on firm performance is still inconclusive. The purpose of this dissertation is to shed more light on this inconclusive association. However, attention is focused on the performance implications of individual diversification actions (e.g., acquisitions and joint ventures) rather than on the overall performance of firms with different levels of diversification. A non-experimental, longitudinal analysis of secondary data was conducted on over 450 unique acquisitions and on more than 210 joint ventures. Results suggest that even when individual diversification actions rather than entire business portfolios are examined, an inverted curvilinear association between diversification relatedness and performance is likely to emerge. This pattern is observed in both acquisitions and joint ventures. However, the association between diversification relatedness and performance in acquisitions is moderated by the level of industry adversity, though factors such as corporate coherence and heterogeneous experience do not moderate the association between diversification relatedness and performance. This study augments the body of knowledge on diversification and adds refinement to the traditional curvilinear finding regarding relatedness. By studying acquisitions and joint ventures independently, the results reveal differences in both slope and inflection points that suggest the relative impact of relatedness may vary depending on the mode of diversification.

Degree:
Level: Doctoral
Discipline: Management
Language(s):
Subject(s):
Keyword(s): Diversification | strategic management | firm performance | relatedness
Contributor(s):
Partner:
UNT Libraries
Collection:
UNT Theses and Dissertations
Identifier:
  • ARK: ark:/67531/metadc67967
Resource Type: Thesis or Dissertation
Format: Text
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Access: Public
License: Copyright
Holder: Cernas Ortiz, Daniel ArturoV
Statement: Copyright is held by the author, unless otherwise noted. All rights reserved.