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Diversification strategy, efficiency, and firm performance: Insight from emerging market

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  • Gyan, Alex Kwaku
  • Brahmana, Rayenda
  • Bakri, Abdul Karim

Abstract

We investigate further the inconsistencies of the diversification-performance link by introducing efficiency as moderating factor. A data of 319 firms was used to conduct a panel data analysis excluding the financial sector industries and the results show three important findings. First, industrial diversification shows a significant contribution in performance improvement while international diversification shows no effect on performance. Yet, international-conglomerate shows a significant negative relationship with performance. Meanwhile, the efficiency results are contrary to our conjecture. We find that efficiency is a factor to enhance performance, but it is not the moderating variable on the diversification-performance link. This implies that the efficiency of the firm has no connection with the link between diversification and performance.

Suggested Citation

  • Gyan, Alex Kwaku & Brahmana, Rayenda & Bakri, Abdul Karim, 2017. "Diversification strategy, efficiency, and firm performance: Insight from emerging market," Research in International Business and Finance, Elsevier, vol. 42(C), pages 1103-1114.
    • Handle: RePEc:eee:riibaf:v:42:y:2017:i:c:p:1103-1114
    DOI: 10.1016/j.ribaf.2017.07.045
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