Diversification Patterns Among Small Businesses
Journal of Small Business Management, (1990), 28:4, pp. 60-70
Posted: 9 May 2016
Date Written: October 1, 1990
Questionnaire responses from 91 owner-managers of diversified businesses in Texas were studied to identify diversification patterns among owner-managed small businesses. The results suggest that financial growth is the usual reason for diversifying and that owner-managers are more likely to start rather than to buy or inherit a second business. Respondents tended to operate relatively distinct businesses rather than closely related, highly integrated ones and to have little experience in the new business area. Although a diversification frequently shared accounting/consulting services among its business lines, no other resource was shared by as many as half of the diversifications. Most of the diversifications studied were profitable, and in most cases the owner would make the same decision again to diversify.
Keywords: Diversification, small business
JEL Classification: L20, L23
Suggested Citation: Suggested Citation