Title

Diversity, Diversification and Profitability among British Manufacturing Companies, 1972-84

Publication Type

Journal Article

Publication Date

12-1988

Abstract

This study investigated the causal relationships between diversity, diversification, and profitability among 304 large British manufacturing companies that differed in both product and multinational diversity. Diversity and profitability were positively related up to a point; after that point, increases in product diversity were associated with declining profitability. The results were unclear with respect to the underlying causal relationships. Product diversification did not increase profitability, and there was limited evidence that profitability promoted diversification. For multinational diversification, however, we found that profitability in the home market encouraged overseas expansion that in turn increased profitability.

Keywords

Diversity in the workplace, diversification in industry, performance management, causal models, international business enterprises, corporate profits, profit maximization, strategic planning

Discipline

Business | Strategic Management Policy

Research Areas

Strategy and Organisation

Publication

Academy of Management Journal

Volume

31

Issue

4

First Page

771

Last Page

802

ISSN

0001-4273

Identifier

10.2307/256338

Publisher

Academy of Management

Additional URL

http://dx.doi.org/10.2307/256338