Diversification strategy, efficiency, and firm performance : Insight from emerging market

• Main Authors: Gyan, Alex Kwaku, Rayenda Khresna, Brahmana, Abdul Karim, Bakri
• Format: Article
• Language: English
• Published: Elsevier Ltd 2017
• Subjects: HD28 Management. Industrial Management
• Online Access: http://ir.unimas.my/id/eprint/17543/1/Diversification%20Strategy.pdf; http://ir.unimas.my/id/eprint/17543/; http://www.sciencedirect.com/science/article/pii/S0275531916303099
• Institution: Universiti Malaysia Sarawak

We investigate further the inconsistencies of the diversification-performance link by introducing efficiency as moderating factor. A data of 319 firms was used to conduct a panel data analysis excluding the financial sector industries and the results show three important findings. First, industrial diversification shows a significant contribution in performance improvement while international diversification shows no effect on performance. Yet, international-conglomerate shows a significant negative relationship with performance. Meanwhile, the efficiency results are contrary to our conjecture. We find that efficiency is a factor to enhance performance, but it is not the moderating variable on the diversification-performance link. This implies that the efficiency of the firm has no connection with the link between diversification and performance. © 2017 Elsevier B.V.