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The Effect of Business Diversification on a Firm¡¯s Performance, Depending on Its Dynamic Capabilities and Market Dynamism

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  • Young Sik Cho

Abstract

This study examines the relationships between a firm's business diversification, dynamic capabilities, and performance. In particular, using the lens of population ecological perspectives, the different effects of diversification on a firm's performance are investigated according to levels of market dynamism and the firm¡¯s dynamic capabilities. This study demonstrates that, in a rapidly changing market environment, the curvilinear relationship between diversification and firm performance can become weaker at higher levels of a firm's dynamic capabilities. In addition, this study argues that unrelated diversification can be a more ideal strategic choice in a dynamic market environment through a firm's optimized dynamic capabilities.

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  • Young Sik Cho, 2013. "The Effect of Business Diversification on a Firm¡¯s Performance, Depending on Its Dynamic Capabilities and Market Dynamism," Journal of Management and Strategy, Journal of Management and Strategy, Sciedu Press, vol. 4(3), pages 1-8, August.
    • Handle: RePEc:jfr:jms111:v:4:y:2013:i:3:p:1-8
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    References listed on IDEAS

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    Cited by:

    1. Jizhong Wu & Sergio Cesaretti, 2019. "Characteristics of Business Models, Business Diversification and Price Segmentation Strategies of Wineries in the Wine Route of Baja California, Mexico," International Journal of Business Administration, International Journal of Business Administration, Sciedu Press, vol. 10(2), pages 147-157, March.
    2. Eric W. Ford & Timothy R. Huerta & Nir Menachemi & Dmytro Babik, 2013. "Aligning Strategic Orientation with Information Resources," Journal of Management and Strategy, Journal of Management and Strategy, Sciedu Press, vol. 4(4), pages 32-43, November.

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