Impact of Diversification Strategies on Performance of Malaysian Public Listed Companies

Yaghoubi, Mona; Abidin, Sazali; Yaeghoobi, Ehsan

doi:10.2139/ssrn.1930145

Cited by 3 publications

(5 citation statements)

References 29 publications

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“…Lins and Servaes (2002) further add that a positive relationship between diversification and performance exists among firms in Malaysia. Yaghoubi et al (2011) find several mixed results of diversification-performance link, considering economic condition, different time periods and diversification types (related and unrelated).…”

Section: Introductionmentioning

confidence: 99%

Moderating role of productivity on diversified conglomerates and performance: the case of Malaysia

Gyan

2017

APJBA

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Purpose -The purpose of this paper is to investigate the previous mixed findings in the relationship between diversification and firm performance. Using international and industrial conglomerates, the paper introduces productivity as a moderating variable to ascertain whether the mixed views in the diversificationperformance nexus is due to variations in productivity. The findings in both proxies of performance (q and return on asset (ROA)) show that productivity is not a significant moderator in the diversificationperformance link, except that under industrial conglomerates productivity enhances ROAs significantly. Meanwhile, the results show that diversification either has no significant value on firm performance or relates negatively with performance -a contrasting result to the hypothesis of this study. Design/methodology/approach -This study adopts diversification measurement, categorisation approach and the methodology used in the work of Fauver et al. (2004) and the subsequent modification by Lee et al. (2012). This study, however, investigates the moderating effect of productivity on diversified firms and not ownership as shown in the previous studies. Performance is measured by two proxies to show robustness of the study. ROA is an accounting tool and Tobin's q reflects a market-based performance of the firm. Findings -The results show that productivity has no moderating impact on a market-based performance of a diversified firm. Regarding ROA, results show a split in finding by showing that productivity has no significant impact on international diversification; however, for industrial diversification, results show significant impact. Originality/value -The paper adds to knowledge of finance by ruling out the view that the inconsistencies in the diversification and performance nexus in emerging economies could be due to vagaries in productivity. It is confirmed that productivity technically does not strengthen the link between diversification and performance: suggesting that factors other than productivity could establish a maximal impact on that link to minimise the inconsistencies in the findings on diversification-performance link.

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Section: Introductionmentioning

confidence: 99%

Moderating role of productivity on diversified conglomerates and performance: the case of Malaysia

Gyan

2017

APJBA

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“…Notably, diversified organizations have been operating in Malaysia for last many years (Daud et al, 2009;Doaei et al, 2014). But contrary to the evidence, limited research has examined impact of product diversification, geographic diversification, as well as their interaction impact on performance of PLCs in Malaysia (Doaei et al, 2014;Yaghoubi, Abidin, & Yaeghoobi, 2011). To highlight the importance of this area, the next section makes comments on the literature available regarding interaction effect of the two strategies.…”

Section: A Comment On Methodologiesmentioning

confidence: 99%

“…Although certain studies conducted for economies of South Korea (Lee, Peng, & Lee, 2008), India (Ramaswamy, Li, & Petit, 2004), China (Yiu, Bruton, & Lu, 2005) and Turkey (Gunduz & Tatoglu, 2003) present certain evidence in support of linear premium model but the findings do not provide consensus. For instance, study of Malaysian companies by Yaghoubi et al (2011) reveals that lower level of product diversification was beneficial for companies, and another study of Malaysian companies by Doaei et al (2014) indicate negative impact of international diversification on performance.…”

Section: Malaysian Corporate Sector and Diversified Malaysian Plcsmentioning

confidence: 99%

“…Most importantly, given the fact that there is a huge percentage of diversified PLCs in Malaysia, though few studies are available on impact of product diversification and geographic diversification on performance, but research into interaction impacts of the two strategies on corporate performance for Malaysian PLCs is extremely limited (Doaei et al, 2014;Yaghoubi et al, 2011) which indicates an important research gap. Hence, a research into this area is warranted.…”

Section: Malaysian Corporate Sector and Diversified Malaysian Plcsmentioning

confidence: 99%

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Significance of Studying Product Diversification, Geographic Diversification, and Their Interaction Impacts for Malaysian Companies: A Literature Review

Hilman¹

2015

ASS

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The objective of this study was to comprehensively and critically review research literature on impacts of product diversification strategy and geographic diversification strategy, conducted particularly in Asian context, and set forth guidelines for future studies. The study concludes that past research into impacts of product diversification and geographic diversification produced indecisive results. There has also been absence of any consensus on the interaction impacts of the two strategies on corporate performance. Although past research studied the topic using variety of methodologies but there has been limited research on the topic for Asian economies compared to Western ones. This is especially true about Malaysian public listed companies (PLCs) for which, particularly, studies regarding interaction impacts of the two strategies are extremely limited. For Malaysia, the challenging business scenario in future coupled with quite significant number of diversified companies warrant research into these areas. Future research could take up the objective of analysing and understanding individual and interaction impacts of product diversification and geographic diversification on corporate performance of Malaysian companies and contribute significantly to this research field. It could adopt new and advanced methodologies for measuring diversification strategies as well as employ several measures of corporate performance to produce comprehensive and robust results. Findings of such research would certainly be useful for practicing managers, particularly Malaysian strategists, and guide them in their decisions concerning diversification strategies and help them better manage their companies' performance.

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“…Diversification delivers mix results with the condition of the economy, and types of diversification. That is related and unrelated diversification and also when the time periods are different diversification gives a mixed performance (Yaghoubi et al, 2011). Diversification will give a high firm performance in developed economic settings.…”

Section: Firm Performance With Diversificationmentioning

confidence: 99%

Product diversification strategies: A review of Managerial skills for firm performance

Jayathilake¹

2018

IJOART

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This paper reports about how product diversification strategies drive for firm performance through managerial skills. Extant literature has presents that increases in product market diversification generate both positive and negative impact on firm performance. The paper aims to embed that diversification in many industries are highly imputable to the power to cross-sell their products, get cost savings, enter the new markets, produce hybrid products and increase brand image. Also with the global financial market liberalization, firms in many countries are increasingly using the product diversification strategies. This is to expand the market share of the firm and also to improve the financial performance. When investigating managerial skills it is more important to identify seven major factors of management tasks. This includes managing individual performance, instructing to their subordinates, planning and allocating the resources, coordinating of mutually beneficial groups, managing of their group performance, continually monitor the business environment and represent in one's staff. Also this is important to examine the findings has given clear-cut differences in the importance of the role of the level of the manager. Many studies have examined managerial skills in many ways. This is about predicting the effectiveness of managers from the managers' skills dimensions such as skills of technical, administrative, human and citizenship behavior. In some studies administration skills have a more effectiveness in managers' effectiveness. There are few empirical studies that describe managerial skills evaluations of firms. This is an organizational level as a moderator of the skill of managerial effectiveness relationship. Future researches need to continue to dig into new variables to identify skills and features that help managers to do more successful. Therefore this paper explains how managerial skills related to the product diversification strategies to drive to firm performances.

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Impact of Diversification Strategies on Performance of Malaysian Public Listed Companies

Cited by 3 publications

References 29 publications

Moderating role of productivity on diversified conglomerates and performance: the case of Malaysia

Moderating role of productivity on diversified conglomerates and performance: the case of Malaysia

Significance of Studying Product Diversification, Geographic Diversification, and Their Interaction Impacts for Malaysian Companies: A Literature Review

Product diversification strategies: A review of Managerial skills for firm performance

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