While an extensive literature examines the diversification‐performance relationship, little agreement exists concerning the nature of this relationship. Both theoretical and empirical disagreements abound. This study synthesizes findings from three decades of research to address major theoretical issues that remain open to debate. We derive three competing models from the literature and empirically assess these using meta‐analytic data drawn from 55 previously published studies. The results of our tests indicate that moderate levels of diversification yield higher levels of performance than either limited or extensive diversification. Thus, we provide support for the curvilinear model; that is, performance increases as firms shift from single‐business strategies to related diversification, but performance decreases as firms change from related diversification to unrelated diversification. The results also indicate major effects from variation in diversification and performance operationalizations. Copyright © 2000 John Wiley & Sons, Ltd.

No abstract

Using institutional theory, the Heritage Foundation/Wall Street Journal 2003 Index of Economic Freedom, and the 2002 Global EntrepreneurshipMonitor, we regress opportunitymotivated entrepreneurial activity (OME) and necessity-motivated entrepreneurial activity (NME) on 10 factors of economic freedom and gross domestic product (GDP) per capita for 37 nations. We find that both OME and NME are negatively associated with GDP per capita and positively associated with labor freedom, but that various other factors of economic freedom are uniquely related to either OME or NME. Specifically, we find that OME, but not NME, is positively associated with property rights, while NME, but not OME, is positively associated with fiscal freedom and monetary freedom. Thus, governmental restrictions of economic freedom appear to impact entrepreneurial activity differently depending on the particular freedom restricted by government and the entrepreneur's motive for engaging in entrepreneurial action.

We test the hypothesis that culturally related international diversification will have a positive impact on firm performance and that the opposite will be true for culturally unrelated globalization. Cultural diversity for Fortune 500 firms was used to predict performance over a ten-year period (1985)(1986)(1987)(1988)(1989)(1990)(1991)(1992)(1993)(1994), controlling for several organizational and industry characteristics. Regression tests using nine indicators of cultural diversity revealed no significant cultural effects. Alternate interpretations are offered. CULTURAL DIVERSITY AND FIRM PERFORMANCEThe international business literature suggests several reasons why global diversification and firm performance should be positively related. First, markets are not perfectly integrated, thus involvement in more than one national market serves to balance out regional macroeconomic trends that are less than perfectly correlated. As a result, MNEs should experience greater market performance since investors recognize and reward performance stability [Shaked 1986]. Relatedly, greater spread across international markets reduces the risk profile of the corporation's overall portfolio of business units, which in turn should have a salutary effect on corporate performance [Caves 1982;Rugman 1979]. Second, international diversification may yield cost advantages by allowing the firm to expand in its domain of distinctive competence and boost production economies without resorting to product diversification [Buhner 1987;Hirsch 1976]. This also allows cross-subsidization between markets [Ohmae 1989a,b]. Third, market imperfection

This study offers a theoretical framework of ethical behavior and a comparative analysis of ethical perceptions of managers of large, mostly publicly traded corporations (those with 1,000 or more employees) and the owners and managers of smaller companies (those with fewer than 100 employees) across 17 years. The primary research provides basic data on the changing standards of ethics as perceived by leaders of large and small businesses where the cultures frequently fall into sharp contrast. Our findings reveal the extent to which the message of business integrity is gaining or losing ground within large and small companies. It does this by means of respondents' judgments of acceptable responses to 16 scenarios profiling common business situations with questionable ethical dimensions. Based on responses from over 5,000 managers and employees (from firms of all sizes) to our scenarios at three points in time (1985, 1993, 2001), we tested two research questions. First, for firms of all sizes, have business ethics improved or declined between the years 1985 and 2001? Second, comparing responses of large and small firm executives across the 1985-2001 time frame, is there a discernible difference in their ethical standards?Our results suggest that business leaders are making somewhat more ethical decisions in recent years. We also found that small business owner-managers offered less ethical responses to scenarios in 1993 but that no significant differences existed with large firm managers in 1985 and 2001.