Governance Structure, Product Diversification, and Performance

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Governance Structure, Product Diversification, and Performance

Author Info

Oijen, A.A.C.J. van
Hendrikse, G.W.J. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)

Abstract

Product diversification and its financial outcomes have been studied exhaustively. However, previous literature has focused on corporations, ignoring other important legal organizations or governance structures. In this paper, we study the diversification strategies of cooperatives and compare them with corporations. We develop hypotheses that predict that cooperatives differ from corporations with respect to the extent, type, and performance of product diversification. Data obtained from a sample of 118 cooperatives and corporations are used to test the hypotheses. We find significant differences between cooperatives and corporations. Therefore, our main conclusion is that governance structure does matter for product diversification and its performance. Other governance structures, besides corporations and cooperatives, and their influence in other areas, besides product diversification, could be promising directions for future research.

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Paper provided by Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam. in its series Research Paper with number ERS-2002-51-ORG Revision_Date: 2009-07-29.

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Date of creation: 28 May 2002
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Handle: RePEc:dgr:eureri:2002200

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This paper has been announced in the following NEP Reports:

NEP-ALL-2002-06-13 (All new papers)
NEP-MIC-2002-06-25 (Microeconomics)

References listed on IDEAS
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Cynthia A. Montgomery & Birger Wernerfelt, 1988. "Diversification, Ricardian Rents, and Tobin's q," RAND Journal of Economics, The RAND Corporation, vol. 19(4), pages 623-632, Winter. [Downloadable!] (restricted)
Jacquemin, Alexis P & Berry, Charles H, 1979. "Entropy Measure of Diversification and Corporate Growth," Journal of Industrial Economics, Blackwell Publishing, vol. 27(4), pages 359-69, June. [Downloadable!] (restricted)
Teece, David J., 1982. "Towards an economic theory of the multiproduct firm," Journal of Economic Behavior & Organization, Elsevier, vol. 3(1), pages 39-63, March. [Downloadable!] (restricted)

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