Product Diversification and Financial Performance: The Moderating Role of Secondary Stakeholders

Su, Weichieh; Tsang, Eric W. K.

doi:10.5465/amj.2013.0454

Cited by 92 publications

(111 citation statements)

References 97 publications

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“…According to Su and Tsang (2015), diversification refers to a company, which operates in more than one industry or product market. Moreover, Park and Jang (2012) argue that diversification implies a company moving into a number of markets (sectors, industries, or segments), in which it was not previously engaged.…”

Section: Theory and Hypothesesmentioning

confidence: 99%

“…Hence, a diversified company may have several different businesses or operate in multi businesses in terms of industry (product diversification), market or resources. According to several prior studies, industry or product diversification might be classified into three forms, including related diversification, unrelated diversification and total diversification (Chang and Wang 2007;Chen and Yu 2012;Hashai 2015;Oh et al 2015;Palepu 1985;Su and Tsang 2015;Zahavi and Lavie 2013). Related diversification refers to diversification strategy which is associated with expanding business in a similar product or in the same product line (backward or forward integration) (Chen and Yu 2012).…”

Section: Theory and Hypothesesmentioning

confidence: 99%

“…On the other hand, a company which adopts unrelated diversification has different products and services or participates in a different industry or market. In addition, total diversification is a summary of both related diversification and unrelated diversification (Oh et al 2015;Palepu 1985;Su and Tsang 2015). Accordingly, there are three ways to measure product diversification, including related diversification (Larry 2010;Palepu 1985), unrelated diversification (Kim and Rasheed 2014;Palepu 1985) and total diversification (Amit and Livnat 1988b;Oh et al 2015;Raghunathan 1995).…”

Section: Theory and Hypothesesmentioning

confidence: 99%

“…Several prior studies have investigated the relationship between related diversification and company performance (Gary 2005;Miller 2006;Park and Jang 2013;Su and Tsang 2015). For example, Su and Tsang (2015) reveal that product diversification relates to financial performance.…”

Section: Theory and Hypothesesmentioning

confidence: 99%

“…Accordingly, diversification strategy has some benefits, such as creating synergy, market power (Montgomery 1994;Purkayastha et al 2012), risk reduction (Martin and Sayrak 2003;Purkayastha et al 2012), and internal capital market efficiency (Erdorf et al 2013;Martin and Sayrak 2003;Purkayastha et al 2012). On the other side, diversification also has several costs that emerge due to the asymmetry information (Berger and Ofek 1995;Chen and Yu 2012;Martin and Sayrak 2003), coordination (Chen and Yu 2012) and agency problems (Ataullah et al 2014;Martin and Sayrak 2003;Su and Tsang 2015) which lead to internal coordination cost (Su and Tsang 2015). Hence, the benefit and cost of the diversification may have an impact on company performance (Chen and Yu 2012;George and Kabir 2012;Montgomery 1994;Palich et al 2000;Purkayastha et al 2012).…”

Section: Introductionmentioning

confidence: 99%

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Diversification and corporate social performance in manufacturing companies

Patrisia

Dastgir

2016

Eurasian Bus Rev

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The effects of diversification on financial performance are well-established, less so the way in which diversification influences company behaviour towards stakeholder demand and social concern. This paper investigates the relationship between business diversification and corporate social performance (CSP) in an industrial setting, in Indonesia. CSP is measured with an index constructed from content and disclosure analysis of annual company reports in line with global reporting initiative standards. A sample of 107 listed manufacturing companies from the Indonesian Stock Exchange is used to estimate a lagged multiple regression model to show that industry-level diversification does not have an effect on CSP. However, distinguishing between related and unrelated diversification produces a different outcome whereby, related diversification is negatively and statistically significantly correlated with CSP. Unrelated diversification, on the other hand, shows a positive and statistically significant relationship. It means the relationship between unrelated diversification and CSP is more positive than the relationship between related diversification and CSP. The findings offer a unique insight into industrial diversification and CSP in Indonesia's expanding manufacturing sector.

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Section: Theory and Hypothesesmentioning

confidence: 99%

Section: Theory and Hypothesesmentioning

confidence: 99%

Section: Theory and Hypothesesmentioning

confidence: 99%

Section: Theory and Hypothesesmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Diversification and corporate social performance in manufacturing companies

Patrisia

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2016

Eurasian Bus Rev

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Sustainable development and the rating effects: A strategic categorization approach

Zeng

Xu²

2019

Corp Soc Responsibility Env

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With the increasing call for sustainable development, rating agencies of corporate sustainability performance (CSP) have got a good momentum of development all over the world. Different from past studies that utilize stakeholder theory or information economics in explaining rating effects, this study takes a strategic categorization approach to investigate firm responses to CSP ratings of a newly emerging rating agency. Using a sample of listed firms in Japan, our study finds that compared with firms with moderate CSP rating scores, firms with high or low rating scores are more likely to increase their corporate philanthropic contributions, and such an effect is strengthened when the firms have higher levels of foreign ownership. This study contributes to the literature by enriching our understanding of how the rating of a newly emerging rating agency shapes firms' sustainable activities.

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Linking stakeholder pressure and corporate environmental competitiveness: The moderating effect of ISO 14001 adoption

Seroka‐Stolka

Fijorek

2022

Corp Soc Responsibility Env

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In this paper, we seek to understand the impact of overall stakeholder pressure (SP) on corporate environmental competitiveness (EC). We have also investigated the pressures derived from various groups of primary and secondary stakeholders on environmental competitiveness. Importantly, the moderation effect of the ISO 14001 adoption on the relationship between SP and EC has been explored. Although, the effect of stakeholder pressure on firms' environmental performance has been studied in the literature, the impact of stakeholder pressure on firms' environmental competitiveness is far less explored. The study also adds significantly to the ongoing discussion as the moderation effect of the ISO 14001 adoption on the relation between stakeholder pressure and environmental competitiveness has been scarcely explored in the literature so far. The results from the cascade of linear regression models have confirmed a positive and significant effect of (overall, primary, secondary) stakeholder pressure on environmental competitiveness. The regression models have also confirmed the presence of the moderation effect of the ISO 14001 adoption on environmental competitiveness.

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Product Diversification and Financial Performance: The Moderating Role of Secondary Stakeholders

Cited by 92 publications

References 97 publications

Diversification and corporate social performance in manufacturing companies

Diversification and corporate social performance in manufacturing companies

Sustainable development and the rating effects: A strategic categorization approach

Linking stakeholder pressure and corporate environmental competitiveness: The moderating effect of ISO 14001 adoption

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