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Within‐business diversification in technology‐intensive industries

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  • Ithai Stern
  • Andrew D. Henderson

Abstract

This study extends diversification research to a new level of analysis, examining how within‐business diversification, which occurs when firms extend existing product lines or expand into new ones, affects organizational survival. While prior research suggests that corporate‐level diversification accounts for relatively little variation in performance, within‐business diversification matters a great deal, by influencing which start‐ups survive and which firms better cope with rapid environmental change. Specifically, we find that the relationship between within‐business diversity and survival is contingent on the amount of environmental change wrought by a firm's competitors as they simultaneously diversify their own product portfolios and innovate technologically. Analysis of the population of U.S. personal computer manufacturers from the industry's founding in 1975 through 1994 supports our premise: Regardless of its effects across businesses, diversification matters a great deal within them. Copyright © 2004 John Wiley & Sons, Ltd.

Suggested Citation

  • Ithai Stern & Andrew D. Henderson, 2004. "Within‐business diversification in technology‐intensive industries," Strategic Management Journal, Wiley Blackwell, vol. 25(5), pages 487-505, May.
    • Handle: RePEc:bla:stratm:v:25:y:2004:i:5:p:487-505
    DOI: 10.1002/smj.400
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    2. Puliga, Gloria & Urbinati, Andrea & Franchin, Enrico Maria & Castegnaro, Stefano, 2023. "Investigating the drivers of failure of research-industry collaborations in open innovation contexts," Technovation, Elsevier, vol. 119(C).
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    7. Kirca, Ahmet H. & Randhawa, Praneet & Talay, M. Berk & Akdeniz, M. Billur, 2020. "The interactive effects of product and brand portfolio strategies on brand performance: Longitudinal evidence from the U.S. automotive industry," International Journal of Research in Marketing, Elsevier, vol. 37(2), pages 421-439.
    8. Yanhui Zhao & Yufei Zhang & Joyce (Feng) Wang & Wyatt A. Schrock & Roger J. Calantone, 2020. "Brand relevance and the effects of product proliferation across product categories," Journal of the Academy of Marketing Science, Springer, vol. 48(6), pages 1192-1210, November.
    9. Haram Seo & Jiao Luo & Aseem Kaul, 2021. "Giving a little to many or a lot to a few? The returns to variety in corporate philanthropy," Strategic Management Journal, Wiley Blackwell, vol. 42(9), pages 1734-1764, September.
    10. Joon Mahn Lee & Rahul Kapoor, 2017. "Complementarities and Coordination: Implications for Governance Mode and Performance of Multiproduct Firms," Organization Science, INFORMS, vol. 28(5), pages 931-946, October.
    11. Harpriya & Rakesh Kumar Sharma & Ash Narayan Sah, 2022. "Impact of demographic factors on the financial performance of women‐owned micro‐enterprises in India," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(1), pages 6-17, January.
    12. Rui Baptista & Murat Karaöz & João Correia Leitão, 2020. "Diversification by young, small firms: the role of pre-entry resources and entry mistakes," Small Business Economics, Springer, vol. 55(1), pages 103-122, June.
    13. Caren B Scheepers & Camrin Roberts Maher, 2019. "Leadership’s Thinking Process with Contextual Intelligence in Executing Diversification Strategy," Journal of Economics and Behavioral Studies, AMH International, vol. 11(1), pages 73-89.
    14. Friberg, Richard, 2019. "All the bottles in one basket? Diversification and product portfolio composition," CEPR Discussion Papers 14119, C.E.P.R. Discussion Papers.
    15. Niron Hashai & Ivo Zander, 2019. "Dynamics in the Origins of Technological Knowledge in Early Firm Years: Implications for New Product Introductions," Strategy Science, INFORMS, vol. 4(3), pages 217-233, September.
    16. Christos Genakos & Tobias Kretschmer & Ambre Nicolle, 2021. "Strategic confusopoly: evidence from the UK mobile market," CEP Discussion Papers dp1810, Centre for Economic Performance, LSE.
    17. Daniel Albert, 2018. "Organizational Module Design and Architectural Inertia: Evidence from Structural Recombination of Business Divisions," Organization Science, INFORMS, vol. 29(5), pages 890-911, October.
    18. Nite, Calvin & Hutchinson, Michael & Bouchet, Adrien, 2019. "Toward an institutional theory of escalation of commitment within sport management: A review and future directions," Sport Management Review, Elsevier, vol. 22(5), pages 571-583.

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