The effects of product diversification on firm performance and complementarities between products: A study of US casinos

The link between product diversification and performance among Spanish manufacturing firms: Analyzing the role of firm size

“…This reasoning is consistent with the arguments informed by RBV, and thus it is reasonable to argue that there will be an inverted U-shaped relationship between PD and performance in advanced economies. The studies by Grant, Jammine and Thomas (1988) on a sample of British manufacturing firms, Tallman and Li (1996) and Qian (2002) on samples of US multinational and small and medium-sized manufacturing firms, respectively, Li and Yue (2008) on a sample of multinational firms based on 13 developed countries, or Kang et al (2011) and Kistruck et al (2013) on samples of US casinos and charities, respectively, have found solid support for this inverted U-shaped relationship.…”

“…Although it has been argued that related diversification can improve performance (e.g., Christensen & Montgomery, 1981;Palepu, 1985;Rumelt, 1974Rumelt, , 1982Tanriverdi & Venkatraman, 2005) and that unrelated diversification can compromise it (e.g., Markides & Williamson, 1994), there is also ambiguity in the empirical evidence. Additionally, there are a few studies that have recently found an inverted U-shaped relationship (e.g., Kang, Lee, & Yang, 2011;Kistruck, Qureshi, & Beamish, 2013;Palich et al, 2000). This diversity of findings is obviously conditioned by methodological issues (such as the use of different samples, time periods, and measures of variables).…”

Does Diversification Affect Capital Structure and Profitability in Pakistan?

“…But recently a U-shaped curvilinear inverse relationship is documented between product diversification and profitability (K.H. Kang et al 2010). Further, simultaneous occurrence of product and international diversification results in increase in leverage, but this relationship does not necessarily hold when considering international and product diversification separately (Chkir & Cosset, 2001).…”

The Effect on Shareholder’s Wealth Due to Focused versus Diversified Acquisitions in the Restaurant Industry

“…Unrelated product firm diversification shows a decline. In the casino industry, the degree of product diversification and firm performance is an inverse U-shaped relationship (Kang, Lee, & Yang, 2011). Firm performance improves due to economies of scope but declines because benefits are outweighed by increased internal transaction costs and managerial information-processing demands beyond internal capabilities.…”