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Diversified Company Performance: Evidence from the United States Airline Industry

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  • Henrique Machado Barros
  • Adriana Bruscato Bortoluzzo
  • Lucas Mello de Campos Arruda

Abstract

This paper analyzes the effect related diversification strategy has on firm performance. Based on a sample of 70% of US airlines, this piece of research investigates the relationship between the degree of diversification and corporate profitability. Multiple linear regression models of panel data (i.e., 6 years) were tested, with model parameters estimated by the Generalized Method of Moments (GMM) technique. We identified that firm performance followed an inverted-U curvilinear pattern. That is, boundary-spanning activities of related diversified firms increase coordination efforts to the extent that, at some point, the benefits of this strategy are offset.

Suggested Citation

  • Henrique Machado Barros & Adriana Bruscato Bortoluzzo & Lucas Mello de Campos Arruda, 2018. "Diversified Company Performance: Evidence from the United States Airline Industry," RAC - Revista de Administração Contemporânea (Journal of Contemporary Administration), ANPAD - Associação Nacional de Pós-Graduação e Pesquisa em Administração, vol. 22(1), pages 23-45.
    • Handle: RePEc:abg:anprac:v:22:y:2018:i:1:1259
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