Faculty Scholarship 1994 - Present

Diversification, Productivity and Performance Enhancement: An International Examination

As firms continue to diversify into new industries and businesses, firms develop a pattern or strategy that guides their diversification efforts, known as a corporate diversification program. Corporate diversification programs outline how and where a firm plans to diversify in the future. Well-designed corporate diversification programs build on internal strengths, the most important of which are existing manufacturing capacity and innovative expertise. However, because of desirable industrial changes to the manufacturing processes and systems, traditional product markets are being severely eroded. To preserve economic production and resource leadership, the competitive strengths of a skilled workforce must be linked with a new growth path (Noda & Collis, 2001). Therefore, the present study examines the propensity of manufacturing firms in the U.S. and Japan to link R&D, market diversification, and product diversification in their push for increased firm performance. The approach to developing a better understanding for diversification from a market- and product-based perspective within the countries being studied is predicated on the belief that each type of diversification has potential to significantly enhance corporate growth and longevity. It should be noted that it is expected that the two countries being studied will exhibit different relationships among the variables being studied. Both product and market diversification are used to uncover any performance relationship differences that may exist on a national or country-specific basis. Based on previous research studies it can be argued that market diversification strategy appears to have similar levels of relevance to product diversification strategy in improving the performance of multi-national firms. However, the magnitude and direction of diversification observed in the study may differ by country. Therefore, it is important to present a comparative impact study across the two countries that will be studied, U.S. and Japan.