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Purpose: This paper aims to explore how corporate diversification influences corporate cash holdings (CCH) in India. It also assesses CCH behavior and its determinants during crisis, stability and recovery periods. Design/methodology/approach: The study uses the system generalized method of moments (System GMM) on 1684 non-financial firms listed on the National Stock Exchange during 2002–2022. Further analyses are carried out for group-affiliated firms based on investment cash flow sensitivity, agency costs and debt capacity. Findings: The findings show that firm diversification (at the group level) results in a roughly 6% fall in cash ratio, thereby implying that diversified firms (diversified business groups) hold lower cash levels than specialized firms. The reduced cash balances are attributed to the financially unconstrained nature of diversified business groups, higher debt capacity, good governance behavior and active internal markets. Additionally, the authors observe a time-varying cash policy for diversified firms, with mean cash holdings being 2% higher during crisis periods. Moreover, the findings reveal that the inverse relationship between diversified firms and CCH is less pronounced for unrelated diversified firms (2% fall in cash ratio) than related diversified firms (5% fall in cash ratio). Originality/value: To the best of the authors' knowledge, this is the first study to examine the relationship between corporate diversification and CCH in India during both crisis and non-crisis periods. The authors' research uniquely uses System GMM on a large sample and differentiates between related and unrelated diversification. [ABSTRACT FROM AUTHOR]

Prior research has reported mixed findings regarding the relationship between diversification and firm performance, because a diversification strategy produces not only synergies but also anti-synergies. We argue that information technology (IT) can help unlock the potential of diversification to enhance firm performance by maximising its synergistic effect while minimising its anti-synergistic effect. Using a sample of publicly listed Chinese firms on the Shanghai or Shenzhen Stock Exchange, we find that IT investment positively moderates the relationship between diversification and firm performance. Investing in IT contributes to greater coordination, control, information exchange, and cross-business knowledge sharing, which can enhance the synergistic effect of diversification and mitigate its anti-synergistic effect. Furthermore, we find that the moderating effect of IT investment on the relationship between diversification and firm performance is stronger for related diversification than unrelated diversification, indicating a greater need for IT when undertaking related (vs unrelated) diversification. These findings contribute to a more comprehensive understanding of the relationship between diversification and firm performance. Moreover, we advance research by showing that the moderating effect of IT on the relationship between diversification and firm performance varies according to diversification strategy.

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Regional resilience is high on the scientific and policy agenda. An essential feature of resilience is diversifying into new activities but little is known about whether major economic crises accelerate or decelerate regional diversification. This article shows how crises impact the development of new technological capabilities within U.S. metropolitan areas by examining three of the largest downturns in U.S. history, the Long Depression (1873–1879), the Great Depression (1929–1934) and the 1970s recession (1973–1975). We find that crises (i) reduce the pace of diversification in cities and (ii) narrow the scope of diversification to more closely related activities. This pattern seems general as it also holds for smaller, local crises. Evidence is presented that this general pattern of technological diversification strongly hampers employment growth. Additionally, we find that diverse cities generally diversify more strongly during times of crisis. [ABSTRACT FROM AUTHOR]

This paper analyses the evolution of renewable energy cooperatives, examining all such cooperatives founded in German districts between 2006 and 2016. The rise of the cooperative form in renewable energy production is a prominent example of the strong involvement of users in market formation. We investigate the effects of 'institutional relatedness', arguing that renewable energy cooperatives can leverage the organizational knowledge and the legitimacy gained by cooperatives active in other industries in the same district. Using an organizational ecology approach, we find that the local presence of cooperatives in other industries indeed supported the founding of renewable energy cooperatives. [ABSTRACT FROM AUTHOR]

Related diversification literature highlights that the reason why corporations pursue this specific type of diversification is to achieve synergistic benefits through sharing common resources efficiently across related business units for higher financial performance. However, it is unclear whether this performance is influenced by the level of firm resources that a firm possesses. Using data from Australian extractive industry, this study assesses the heterogeneity of firm resource‐possession in relation to firm performance and found that related diversified firms that possess higher resource levels extract larger proportion of synergistic advantage to enhance financial performance. The study has discussed key theoretical and practical implications. [ABSTRACT FROM AUTHOR]

Do capabilities reside in firms, in regions, or in both? Within economic geography, most contemporary research on diversification examines how local structures condition regional development possibilities. The underlying logic is that capabilities are generated within regions and sometimes shared between them. We challenge that logic, exploring whether capabilities are more likely to emerge within the firm and to flow across spatial boundaries than they are to be built within the region flowing across firm boundaries. Analysis focuses on technological diversification within the establishments of multilocational firms operating across Chinese cities. Overall, the results demonstrate that the knowledge structure of firms is more important than the knowledge structure of cities in shaping diversification within establishments. We show that rates of technological diversification vary according to plant status (headquarters or not), location (core or peripheral city), and on whether plants are introducing more or less complex knowledge. The influence of plant, firm, and regional characteristics on diversification vary markedly across the analytical samples examined. [ABSTRACT FROM AUTHOR]

ABSTRACT: This study aims to examine how unrelated diversification facilitate firm’s growth and innovation. To achieve this goal, we investigate how Maeil Dairies has diversified through open innovation as the Korean dairy market struggles to maintain its size. Maeil Dairies, one of the top three conglomerates in the Korean dairy industry, has gone through different forms of diversification both related and unrelated to its core competencies. This study presents what the overlapping competencies are in its diversified products and businesses, analyzes the effectiveness of diversification in terms of relatedness, and examines the need for unrelated diversification. By analyzing the four diversification categories of the Maeil Dairies case and applying diversification theory, this study shows that although related diversification is more recommendable in most circumstances, unrelated diversification may present new opportunities and is necessary in order to avoid stagnation and falling behind.

From the perspective that a region's industrial development mostly builds upon existing local capability endowments to form a trajectory of related diversifications, we argue that regions with a strong technology-based knowledge-intensive business service (T-KIBS) sector potentially have resource-based relatedness in their 'knowledge space' allowing their local manufacturing sector to diversify production more easily towards Industry 4.0. The study assays whether the internal configuration of the local KIBS sector contributes to the economic outcome of local industry by implementing spatial econometrics models on a regionalized database for 24 European Union countries. [ABSTRACT FROM AUTHOR]

Copyright of Amman Arab University Journal is the property of Amman Arab University and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

The article considers the problems of increasing the competitiveness of public catering establishments and using the diversification strategy in this industry. The tasks and conditions for diversification as a competitive business development strategy are formulated, three types of diversification, including related, horizontal and conglomerate, are described in detail. In the paper, economical and technological features of the catering industry, having a permanent character, as well as trends in the development of the industry, which are of a conjuncture nature, are highlighted. The author carried out the segmentation of public catering enterprises according to the level of the price category with the identification of three main segments. For each segment, the content of all three types of diversification is proposed and clarified, and recommendations on the use of the diversification strategy were also formulated. All types of diversification are related to the innovative development of the industry and can be viewed as ways to increase the competitiveness of enterprises in the industry under consideration

This article attempts to explain the resilience and international competitiveness of a micro-region in Portugal, based on three intertwined levels – firm, industrial structure and region. The study covers the period 2006–2014 and is based upon a rich micro-level dataset of all firms established in Portugal. The findings reveal the dynamics of the industrial base of this region and how its enterprises managed to remain competitive over time, reinventing themselves through innovation and related diversification, conveying knowledge and expertise from incumbent businesses to new ones with higher value added. Proximity between firms played an important role in learning processes, and knowledge creation was promoted by shared knowledge. Competitiveness requires ongoing replacement of resources and rejuvenation of structures and institutions, turning regional capabilities into valuable assets. [ABSTRACT FROM AUTHOR]

Measures developed for the analysis of corporate diversification have become fundamental to a broad range of strategy research. This paper examines the content validity of the two most widely used continuous measures of related diversification--the related component of the entropy index and the concentric index--and raises fundamental questions about their validity as indicators of portfolio relatedness. These questions are not driven by the use of SIC data for estimation of the indexes; they involve validity problems intrinsic to the construction of the measures. The related component of entropy and the concentric index are sensitive to features of corporate portfolio composition that may not be directly linked to portfolio relatedness. These sensitivities can create important ambiguities in strategy research. [ABSTRACT FROM AUTHOR]

This paper proposes two new indicators of related diversification applied to Smart Specialization. The indicators are useful monitoring tools to assess the initial conditions and evolution of the European regions (NUTS-2) regarding one of the orienting principles of Smart Specialization: relatedness. The first indicator ranks regions quantitatively in a given year concerning related variety of specializations; and the second indicator captures to what extent regions acquire, over time, new specializations in related areas. These indexes use the concept of technological relatedness, and are applied to the case of European regions using the Organisation for Economic Co-operation and Development's (OECD) REGPAT database. The results indicate that regions located at the core of the European continent, as well as Northern European regions, perform better, whereas Southern and Eastern Europe persistently exhibit lower scores. [ABSTRACT FROM AUTHOR]

This paper investigates the role of different types of firms in related and unrelated diversification in regions, in particular the extent to which foreign-owned firms induce structural change in the manufacturing capability base of 67 Hungarian regions between 2000 and 2009. Doing so, it connects more tightly the literatures of evolutionary economic geography and international business. The results indicate that foreign-owned firms deviate more from the region's average capability match than domestic-owned firms. However, this deviation is larger on the short run than in the long run, and more pronounced in peripheral regions and in the capital region. [ABSTRACT FROM AUTHOR]

Using data on the emergence of music genres from 1970 to 2015, this paper examines the relative importance of related and unrelated diversification processes for symbolic knowledge creation. Modelling 33 urban music scenes from Northern America and Europe as network-based symbolic knowledge bases allows for the testing of whether new genres are related or unrelated to pre-existing knowledge bases. The results show that new music genres spawn mainly from local knowledge sources in the centre of music scenes. However, symbolic knowledge creation rarely happens without contributions of extra-local knowledge. These unrelated diversification processes are grounded in the anchoring of trends and fashions originating elsewhere. [ABSTRACT FROM AUTHOR]

Our study explores research avenues that can help policymakers to assess regional capabilities for 'green' economic restructuring. After reviewing the relevant literature, and envisioning research paths which consider both market transactions and externalities, we propose possible ways to translate past research findings into novel statistical tools. Our point of departure is the 'skill relatedness' among economic sectors in Norway, as inferred from intersectoral labour flows (years 2008–2014). Then, on the basis of the industrial composition in each of the 161 Norwegian labour market areas, candidate regions that could benefit the most from a 'green' restructuring policy, aimed at photovoltaics in our empirical example, are brought forward. [ABSTRACT FROM AUTHOR]

Free trade in the Asia-Pacific region (AFTA) and Southeast Asia (MEA) becomes a challenge for family firms in developing their business activities. Strategies that can be taken by family firms to cope with existing market pressures can be pursued by implementing a diversification and compensation strategy. This study aims to explain and analyze the influence of diversification in related models, diversification on unrelated models, and executive compensation to firm value. In this study the population taken is a family firm in the manufacturing sector listed on the Indonesia Stock Exchange during the year 2012-2016 amounted to 140. The important finding of the research is that the diversification in the related model has no significant effect on firm value, the diversification on the unrelated model has no significant effect on firm value, the executive compensation in the related diversified company has a significant negative effect on firm value, then the executive compensation on the unrelated diversified company has a significant positive effect on the value of the company. [ABSTRACT FROM AUTHOR]

This paper develops and tests an expanded model of relatedness and firm performance, based on Galbraith's (1983) center of gravity concept. Traditional empirical approaches to relatedness have focused primarily on product similarities. This research operationalizes and tests a managerial dimension of relatedness, based on a firm's historical center of gravity, which assumes that businesses in the same vertical stage of the value chain are more similar to manage than those in different stages. Empirical results support Galbraith's hypothesis that this managerial dimension of relatedness may be more important than constrained product relatedness in achieving high performance. This finding suggests that diversified firms should operate in lines of business that are managerially similar in order to minimize complexity and apply core skills appropriately. Interestingly, while managerial relatedness was positively associated with firm performance in two out of three samples, constrained product relatedness was negatively associated with performance in two of the three samples. Taken together, these results suggest that optimal relatedness profiles may be industry specific, and that corporate relatedness may be more important in managing diversity than product relatedness. Future research should seek a better understanding of the specific dimensions which underlie both product and managerial relatedness. [ABSTRACT FROM AUTHOR]

Firm managers seek a way to improve their firm performance. One way is to use diversification strategy which creates range of business activities for the firms and leads to a better performance. This study examines the effect of diversification strategy on performance of 87 companies listed on Tehran Stock Exchange from 2010 to 2014. The main objective of this study is to investigate the non-liner relationship between diversification strategy and profitability of business units by sorting it into its related and unrelated components. In this study, multivariate linear regression model is used to test the hypotheses. The statistical method is Panel Data. The results showed that there is a curve-shaped relationship between diversification and profitability of business units; that is, profitability decreases at low levels of related diversification and increases at its high levels; also profitability increases at low levels of unrelated diversification and decreases at its high levels.

There is increasing interest in the drivers of industrial diversification, and how these depend on economic and industry structures. This article contributes to this line of inquiry by analyzing the role of industry relatedness in explaining variations in industry diversification, measured as the entry of new industry specializations, across 173 European regions during the period 2004-2012. First, we show that there are significant differences across regions in Europe in terms of industrial diversification. Second, we provide robust evidence showing that the probability that a new industry specialization develops in a region is positively associated with the new industry’s relatedness to the region’s current industries. Third, a novel finding is that the influence of relatedness on the probability of new industrial specializations depends on innovation capacity of a region. We find that relatedness is a more important driver of diversification in regions with a weaker innovation capacity. The effect of relatedness appears to decrease monotonically as the innovation capacity of a regional economy increases. This is consistent with the argument that high innovation capacity allows an economy to break from its past and to develop, for the economy, truly new industry specializations. We infer from this that innovation capacity is a critical factor for economic resilience and diversification capacity. [ABSTRACT FROM AUTHOR]

The paper studies of the effect the related and unrelated diversification for products and ownership structure on capital structure for a sample of 87 firms out of 19 industry listed on the Tehran stock exchange during the period 2004- 2009. For to regress of models to apply of multivariate approach include panel data and cross-sectional regressions. This study adopts panel fixed effects regression models to estimate the relationship between diversification (related/unrelated), ownership structure on capital structure, while controlling for some firm-specific characteristics like size, tangibility, growth opportunities, none-debt tax shields, return of total assets and coefficient of variation.The results indicated that related diversification (RD) positively and unrelated diversification (UD) negatively and significantly, effects on capital structure. Base‌on the definition of capital structure in this paper, firms that are undertake to unrelated diversification strategy, mainly financed by debt; whereas firms that follow related diversification strategy, increased their profitability and sale of production. therefore firms that use of the strategy (RD), minimize risk of liquidity and are likely to be mainly financed by equity. In addition, the results indicated that there was between ownership concentration and capital structure negatively and significant relation. According to the results, the firms that tend to engage in a high degree of ownership concentration, tending in have a lower level of debt in capital structure and stockholders more tend to finance by equity and thus minimize agency costs. The findings of the research also indicate that there isnot perceive significant relation between institutional stockholders and capital structure.

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The effects of diversification on financial performance are well-established, less so the way in which diversification influences company behaviour towards stakeholder demand and social concern. This paper investigates the relationship between business diversification and corporate social performance (CSP) in an industrial setting, in Indonesia. CSP is measured with an index constructed from content and disclosure analysis of annual company reports in line with global reporting initiative standards. A sample of 107 listed manufacturing companies from the Indonesian Stock Exchange is used to estimate a lagged multiple regression model to show that industry-level diversification does not have an effect on CSP. However, distinguishing between related and unrelated diversification produces a different outcome whereby, related diversification is negatively and statistically significantly correlated with CSP. Unrelated diversification, on the other hand, shows a positive and statistically significant relationship. It means the relationship between unrelated diversification and CSP is more positive than the relationship between related diversification and CSP. The findings offer a unique insight into industrial diversification and CSP in Indonesia's expanding manufacturing sector. [ABSTRACT FROM AUTHOR]

Copyright of Regional Studies is the property of Taylor & Francis Ltd and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

A diversification strategy increases the range of stakeholder demands and social issues related to a firm’s operation. Examining the consequence of production diversification strategy at a broader level, not only (short-term) financial performance but also long-term performance, as proxied by corporate social responsibility (CSR), is surprising. We show that a firm’s production diversification is associated with stronger engagement in CSR, particularly for unrelated diversification. And the higher level of diversification is, the more investment in CSR. Our findings lead to the interesting questions regarding diversification discount and the value of unrelated diversification, which has often been criticized because of its negative impact on short-term financial performance. [ABSTRACT FROM PUBLISHER]

Rumelt (1974), one of the basic researches related to diversification strategy, reveals that Dominant-Constrained (DC) and Related-Constrained (RC) strategies make possible a higher level of corporate performance. However, Rumelt (1982) clarifies that these strategies are not necessarily the ideal diversification strategies, because the industry effect have an influence on the performance of companies in these research. This paper re-consolidates and re-examines the data in Rumelt (1974) to reveal that companies in the particular industry tend to adopt the particular strategy. For example, many of the companies that adopted an RC strategy (Related-Constrained firms), a strategy that was viewed as leading to high performance, were in the drug, chemical, and machinery (except electrical) industries.

Este artículo presenta, en primer lugar, un breve análisis crítico de las diferentes formas de medida de las estrategias corporativas que recoge la literatura especializada. Sin embargo, frente a la imposibilidad de poder medir la diversificación, a través de las formas tradicionales, se ha optado por la construcción y aplicación de una forma de medida, a partir de la información suministrada por la Encuesta sobre Estrategias Empresariales (ESEE). El periodo de análisis es del año 1.991 hasta el año 2.005 y se aplica la forma de medida propuesta a una muestra de empresas industriales españolas. Posteriormente, se realiza un análisis de la distribución de empresas diversificadas por sectores industriales, al igual que un análisis de la distribución de las empresas según su tamaño. Los resultados arrojan que en la realidad española sólo el 15% de las empresas siguen estrategias de diversificación y que la mayoría de las empresas se encuentran en la categoría de menor dimensión.This article presents, in the first place, a brief critical analysis of the different ways of measure of the corporate strategy that the specialized literature has published. However, given to the difficulty of measuring the diversification construct through traditional forms, it has been chosen the construction and application of a way of measure starting from the information given by the Survey on Business Strategies (ESEE). The analysis period is from 1991 to 2005 and the form of measure proposal is applied to a sample of spanish industrial firms. Later on, we analyzes the distribution of diversified firms by industrial sectors and an analysis of the distribution of the firms according to their size. The results show that in the spanish case only 15% of the companies follows diversification strategies and that most of the companies fall into smallest dimension category.

El objetivo de este artículo es, en primer lugar, analizar brevemente las formas de medida de la diversificación corporativa a través de un análisis comparativo de éstas y, en segundo lugar, descubrir cuáles son los motivadores de la diversificación relacionada de las empresas industriales españolas. Para ello, inicialmente se realizó una revisión de la literatura especializada sobre los tipos de medida y posteriormente se estudiaron en profundidad dos teorías: La Teoría de Economía Industrial y la Teoría de Recursos y Capacidades, de las cuales existen sólidos argumentos que justifican que las empresas se diversifiquen hacia mercados relacionados. Para contrastar el modelo se utilizó la base de datos de la Encuesta sobre Estrategias Empresariales (ESEE), para el periodo comprendido entre el año 1991 y el año 2002 y se aplicó regresión logística binomial a un panel completo de observaciones de empresas diversificadas. Los resultados del estudio arrojaron que la concentración industrial, la rentabilidad industrial y los activos intangibles son factores que determinan que la empresa se diversifique hacia mercados relacionados a su negocio tradicional.The objective of this article is to firstly analyze the forms of measurement of corporate diversification through a comparative analysis of existing measures and secondly, to understand the motivations of Spanish manufacturing companies to perform relational diversification. To this end, a preliminary literature review on forms of measurement was conducted and then, two theories were studied: The Theory of Industrial Economy and the Theory of Resources and Capabilities. These theories provided a solid foundation for explaining why companies diversify to related markets. To test the model, data was obtained from a database that contains information about the Survey of Managerial Strategies (ESEE), for the period between 1991 and 2002. Binomial logistic regression was performed on a complete set of observations of diversified manufacturing companies. The results of the study showed that industrial concentration, industrial profitability, and intangible assets are factors that determine company diversification toward related markets.

This article builds on the agency-stewardship approach to examine if the impact of related and unrelated diversification strategies on firm performance is contingent on the leadership style of diversifying Chief Executive Officers (CEOs) ranging from the agent model to the steward model. For this purpose, it proposes four hypotheses which are empirically tested using data from a sample of 183 Spanish firms. The findings provide new insights about the relevance of CEOs’ leadership style so that a right fit between diversification type and executive leadership style seems to be crucial for firms pursuing growth and profitability benefits. [ABSTRACT FROM AUTHOR]

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This study suggests that unrelated diversification has a positive influence on the probability of fraudulent reporting whereas related diversification has a negative influence on the probability of fraudulent reporting. The strength of the influence of these corporate level strategies is contingent on the moral character of the firm. Unrelated diversification provides opportunity for financial innovation within the firm's internal capital market, which can result in fraudulent reporting. This is more likely when the moral character of the firm is driven by a conscienceless financial self-interest motive, as implied by the firm's contempt toward the larger community (in terms of damage inflicted on the interests of people outside the firm). In contrast, related diversification, where product divisions focus on mutual sharing and monitoring of operational activities, can reduce the probability of fraudulent reporting. This is more likely when constituents within the firm view themselves as moral citizens, as implied by the firm's benevolence toward the larger community. Hence, while unrelated diversification focuses the energies of managers within the firm on financial manipulation, related diversification focuses these energies on productive purposes. [ABSTRACT FROM AUTHOR]