(back to Corporate Diversification)
Core readings are marked with an asterisk (*); research coming out of doctoral dissertations is indicated by "DOC" following the reference; review papers are similarly indicated by “R”

Diversification Motives

Hoskisson, R.E. and M.A. Hitt (1990), “Antecedents and performance outcomes of diversification: A review and critique of theoretical perspectives,” Journal of Management, 16 (2), 461–509. (R)

Merino, F. and D.R. Rodríguez (1997), “A consistent analysis of diversification decisions with non-observable firm effects,” Strategic Management Journal, 18 (9), 733–743.

* Montgomery, C.A. (1994), “Corporate diversification,” Journal of Economic Perspectives, 8 (3), 163–178. (R)

Montgomery, C.A. and S. Hariharan (1994), “Diversified expansion by large established firms,” Journal of Economic Behavior and Organization, 15, 71–89.

Panzar, J.C. and Willig, R.D. (1981), “Economies of scope,” American Economic Review, 71 (2), 268–272.

* Penrose, E.T. (1959), The Theory of the Growth of the Firm. Wiley, N.Y.

Teece, D.J. (1980), “Economies of scope and the scope of the enterprise,” Journal of Economic Behavior and Organization, 1, 223–247.

Teece, D.J. (1982), “Toward an economic theory of the multiproduct firm,” Journal of Economic Behavior and Organization, 3, 39–63.

Relatedness, Diversification, and their Empirical Measurement

Davis, R. and I.M. Duhaime (1992), “Diversification, vertical integration, and industry analysis: New perspectives and measurement,” Strategic Management Journal, 13 (7), 511–524. (DOC)

Farjoun, M. (1998), “The independent and joint effects of the skill and physical bases of relatedness in diversification,” Strategic Management Journal, 19 (7), 611–630. (DOC)

Jacquemin, A.P. and C.H. Berry (1979), “Entropy measure of diversification and corporate growth,” Journal of Industrial Economics, 27, 359–369.

* Lemelin, A. (1982), “Relatedness in patterns of inter-industry diversification,” Review of Economics and Statistics, 64, 646–657.

Robins, J. and M.F. Wiersema (1995), “A resource-based approach to the multibusiness firm: Empirical analysis of portfolio interrelationships and corporate financial performance,” Strategic Management Journal, 16 (4), 277–299.

* Silverman, B.S. (1999), “Technological resources and the direction of corporate diversification: Toward an integration of the Resource-Based View and Transaction Cost Economics,” Management Science 45 (8), 1109–1124. (DOC)

Teece, D.J., R.P. Rumelt, G. Dosi, and S.G. Winter (1994), “Understanding corporate coherence,” Journal of Economic Behavior and Organization, 23, 1–30.

Diversification’s Effect on Firm Performance

Barney, J.B. (1996): Gaining and Sustaining Competitive Advantage. Addison-Wesley, Reading, MA, Chapter 11 (“Diversification strategies”). (R)

* Berger, P.G. and E. Ofek (1995), “Diversification’s effect on firm value,” Journal of Financial Economics (37), 39–65.

Lang, L.H.P., and R.M. Stulz (1994), “Tobin’s q, corporate diversification, and firm performance,” Journal of Political Economy, 102 (6), 1248–1280.

Martin, John D., and Akin Sayrak, 2003, Corporate diversification and shareholder value, Journal of Corporate Finance 9, 37–57. (R)

Ramanujam, V. and P. Varadarajan (1989), “Research on corporate diversification: A synthesis,” Strategic Management Journal, 10 (6), 523–551. (R)

* Rumelt, R.P. (1974), Strategy, Structure, and Economic Performance, Division of Research, Harvard Business School, Boston, MA. (DOC)

* Villalonga, Belén (2003), “Research Roundtable Discussion: The diversification discount,” Financial Economics Network FEN-Educator Series, Social Science Research Network (SSRN), http://papers.ssrn.com/sol3/papers.cfm?abstract_id=402220 (R)

* Villalonga, Belén (2004a), “Does diversification cause the ‘diversification discount’?,” Financial Management 33 (2), 5–27. (DOC)

Villalonga, Belén (2004b), “Diversification discount or premium? New evidence from the Business Information Tracking Series,” Journal of Finance, 59, 479–506. (DOC)