THE IMPACT OF DIVERSIFICATION STRATEGY ON FIRMS' PERFORMANCE
Keywords:
diversification strategies, firm performance, related diversification, unrelated diversification, curvilinear model, inverted U-shape theory
Abstract:
Diversification strategies have been widely researched in the field of strategic management, but findings on their impact on firm performance are contradictory, indicating a need for further research. It is known that diversification can enhance firm performance, but the effects vary depending on the type of diversification and the time frame. This paper uses a systematic review of the existing literature to analyze the impact of diversification strategies on firm performance. Various studies on diversification were analyzed, leading to the conclusion that the related diversification is beneficial in the short term, while the unrelated one may lead to a loss of focus and the increased costs. The research results confirm the inverted U-shape theory in relation to diversification and firm performance, suggesting a need for careful management of diversification and consideration of contextual factors. The findings emphasize the importance of understanding the dynamics of diversification and its impact on firm performance and indicate the need for further research in strategic management to better comprehend effects of different diversification strategies.
CITATION:
IEEE format
S. Mirković, L. Mirković, “The Impact of Diversification Strategy on Firms' Performance,” in FINIZ 2024 - Social Media and Contemporary Business, Belgrade, Singidunum University, Serbia, 2024, pp. 89-95. doi: 10.15308/finiz-2024-89-95
APA format
Mirković, S., Mirković, L. (2024). The Impact of Diversification Strategy on Firms' Performance. Paper presented at FINIZ 2024 - Social Media and Contemporary Business. doi:10.15308/finiz-2024-89-95
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