Abstract

http://ssrn.com/abstract=1987321
 
 

References (145)



 
 

Footnotes (13)



 


 



Diversification and Performance in Developed and Emerging Market Contexts: A Review of the Literature


Saptarshi Purkayastha


The Icfai Institute for Management Teachers

Tatiana S. Manolova


Bentley University

Linda F. Edelman


Bentley University - Department of Management

March 2012

International Journal of Management Reviews, Vol. 14, Issue 1, pp. 18-38, 2012

Abstract:     
The link between diversification and performance has become an important topic for research in diverse fields such as strategic management, industrial organization and financial management. However, a synthesis of the research done in developed and emerging markets is missing. This paper attempts such a synthesis by comparing and contrasting the past cumulative empirical research evidence on the relationship between diversification and firm performance in the context of developed economies to the more recent work in the emerging economies. The empirical literature has been divided into three broad perspectives, and the paper highlights the considerable diversity in its findings in developed and emerging markets across each of these perspectives. Based on this study, it is proposed that related diversification is preferable in developed economies and should be based on specific resources, whereas unrelated diversification is appropriate in emerging economies and should be based on generic resources. Although agency problems exist in both contexts, it is argued that the type of problem differs in developed and emerging markets. The paper concludes by identifying three directions for future research. First, the relationship between diversification and performance should be examined across each industry separately and not in aggregate. Secondly, future research needs to examine the organizational mechanisms required to make diversification successful. Finally, the relationship needs to be examined under unstable and dynamic situations such as the current global economic downturn.

Number of Pages in PDF File: 21

Accepted Paper Series


Date posted: January 18, 2012  

Suggested Citation

Purkayastha, Saptarshi and Manolova, Tatiana S. and Edelman, Linda F., Diversification and Performance in Developed and Emerging Market Contexts: A Review of the Literature (March 2012). International Journal of Management Reviews, Vol. 14, Issue 1, pp. 18-38, 2012. Available at SSRN: http://ssrn.com/abstract=1987321 or http://dx.doi.org/10.1111/j.1468-2370.2011.00302.x

Contact Information

Saptarshi Purkayastha
The Icfai Institute for Management Teachers ( email )
Hyderabad
Hyderabad, 500 034
India
Tatiana S. Manolova
Bentley University ( email )
175 Forest Street
Waltham, MA 02145
United States
Linda F. Edelman
Bentley University - Department of Management ( email )
175 Forest Street
Waltham, MA 02145
United States
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References:  145
Footnotes:  13

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