Corporate diversification and firm performance: An inverted U-shaped hypothesis

Ali, Sajid; Hashmi, Shujahat Haider; Mehmood, Tahir

doi:10.33844/ijol.2016.60389

Cited by 11 publications

(21 citation statements)

References 49 publications

(115 reference statements)

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“…The firm can grow by expanding the existing production facilities while maintaining product composition, or by entering relevant fields and changing the product composition [32]. Additionally, diversification can be achieved through a variety of approaches, including internal development, joint ventures, license agreements, mergers, and acquisitions [33].…”

Section: Business Diversificationmentioning

confidence: 99%

What Is Important for the Growth of Latecomers in the Medical Device Industry?

Yeom

Song

Shin

et al. 2021

Journal of Open Innovation: Technology, Market, and Complexity

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In the medical device industry, which is highly value-added and requires multidisciplinary knowledge, major global firms dominate the market, so it is necessary to establish a growth strategy suitable for latecomers. Through a Korean case, it was confirmed that import, diversification, and R&D activity are distinguishing strategies. The existing literature covers these strategies, but these findings are fragmented and differ from those of latecomers. This study examined the impact of the above factors on corporate growth, based on data of 440 Korean medical device manufacturers from 2011 to 2016. According to the results of panel data regression, diversification and R&D activity have a positive effect on the financial performance of a firm, while the import business model shows a negative effect. These results are expected to provide implications with respect to strategies for the growth of latecomers in the medical device industry. In future research, it is necessary to investigate how detailed strategies in accordance with the growth stages of a firm can be established.

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Section: Business Diversificationmentioning

confidence: 99%

What Is Important for the Growth of Latecomers in the Medical Device Industry?

Yeom

Song

Shin

et al. 2021

Journal of Open Innovation: Technology, Market, and Complexity

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“…ROA shows the effectiveness of the company's assets in generating profits. ROA is calculated as net income divided by average total assets [21,22]. Revenue growth is another accountancy-based measure of firm performance.…”

Section: Performance Variablesmentioning

confidence: 99%

“…Revenue growth is another accountancy-based measure of firm performance. Revenue growth, which is used to measure how fast a company's business is expanding, is calculated as the current year's revenue minus the prior year's revenue and then divided by the prior year's revenue [21,23]. In contrast, market share is a market-based measure of a firm's performance.…”

Section: Performance Variablesmentioning

confidence: 99%

“…Construction companies make decisions regarding their business model with the expectation that it will lead to better performance, such as increasing profitability, facilitating growth, and achieving a higher level of market power. Therefore, to examine whether a business model can meet these expectations, this study employs Return on Asset (ROA), revenue growth and market share, which are widely used in previous literature, as the performance variables of profitability, growth and market power, respectively [20][21][22][23]. The findings of this study are expected to provide useful guidance for executives of construction companies seeking to design and implement better business models that will improve their firm's performance in the international construction market.…”

Section: Introductionmentioning

confidence: 99%

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Business Models and Performance of International Construction Companies

et al. 2019

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As the construction business environment becomes ever more competitive and intense, business models are receiving considerable attention as potential sources of sustainable survival and growth. In order to design sustainable business models in today’s global construction market, it is important to understand the business models that would make a construction company achieve higher performance in terms of profitability, growth and market competitiveness. Therefore, this study identifies the business model variables of international construction and statistically analyzes the relationship between business model variables and firm performance guiding 72 international construction companies over a six-year period from 2009 to 2014. We examine the effect of business model variables on firm performance and how different business model variables can lead to different outcomes. The results show that business models play significant roles in determining the performance of international construction companies, with financial resources being a major determinant of profitability and regional diversification a major determinant of revenue growth and market competitiveness. Each business model variable had a different effect on profitability, growth and market competitiveness. This confirms that there are ideal combinations of business model variables that can help firms achieve higher performance. These findings are expected to provide useful guidance to assist executives’ decision making when designing a business model that will enable their firm to thrive in the global marketplace.

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“…Diversification does not necessarily lead to improved performance and not all diversified organizations are profitable (Manyuru et al, 2017;Jasper, 2016). According to Alli et al, (2016) an increased diversity within a business portfolio may result in a loss of control by top officials, which can deteriorate business performance. It may also result in the weakening of corporate governance structure and family relationships (Sahu, 2017;Santarelli& Tran, 2016).…”

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confidence: 99%

Product and Service Quality Capabilities and Market Performance of the Postal Corporation of Kenya in Western Region

Idah¹,

Otuya²

2021

theijbm

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Product and Service Quality Capabilities and Market Performance of the Postal Corporation of Kenya in Western Region 1. Introduction Today, firms operate in highly dynamic environments characterized by constant technological changes and shifts in customer tastes and demands (Ng'ang'a, Namusonge, &Sakwa, 2016). These dynamics necessitate that managers to utilize their internal resources also known as organizational capabilities to fight for survival of the firm (Kamasak, 2017). Rehman, Mohamed &Ayoup (2019) define organizational capabilities as the firm's ability to manage its internal resources effectively, making strategic decisions and effectively implementing the strategic decision process to achieve the desired results. Organizational capabilities are a concept based on Resource-Based Theory that emerged to manage business sustainability and competitiveness (Nayeemunnisa & Gomathi, 2020).Kamasak (2017) advances those organizational capabilities capable of affecting performance include innovation capability, competence of employees' capability, managerial capability, strategic intent & technical capabilities, marketing capability, business processes capability, quality of service and social networks capability.Almutawa, Muenjohn& Zhang (2018) define service quality as an assessment or attitude towards the superiority of a service. As time progresses, service quality can be assessed by looking at the correspondence between expectations and perceptions towards the service performance received by customers, or the service performance provided by the company, judging by the direct assessment given by the customers. Service quality is an emerging competitive dimension in today's business world and identified as one of the strategies of success (Kotler and Keller, 2016). Service organizations, without regards for size, are increasingly seeking the unique ways of differentiating their offering and service quality is one such option in this regard. Many organizations, today, have responded to the strategic and financial impact of quality, treating it as a strategic weapon (Abuzaid, 2015). Product quality is the ability of a

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Corporate diversification and firm performance: An inverted U-shaped hypothesis

Cited by 11 publications

References 49 publications

What Is Important for the Growth of Latecomers in the Medical Device Industry?

What Is Important for the Growth of Latecomers in the Medical Device Industry?

Business Models and Performance of International Construction Companies

Product and Service Quality Capabilities and Market Performance of the Postal Corporation of Kenya in Western Region

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