IDEAS home Printed from
   My bibliography  Save this paper

Technology and demand mechanism in firm diversification strategies.An experimental method to discriminate the fundamental drivers



An essential part of any firm’s corporate strategy is the choice of the business portfolio through which to compete. When the portfolio’s decision involves more than one business, firms are said to implement a diversification strategy, which is put into action through the firms concomitant entry in different market segments. It implies that the nature of the market segmentation affects the firms’ differentiation degree. The aim of this paper consists in exploring a method for determining the market segmentation that is most informative to understand firms’ diversification strategies, or in other words the market segmentation that most clearly reveals about firms’ main diversification drivers. Given that each business can be described according to a set of business characteristics and by using different levels of detail, in the perspective of understanding firm diversification strategies, it is fundamental to determine the directions in the space of business characteristics along which it is “mostly convenient” to claim the business diversity and which is the “best” level of aggregation at which assess the businesses boundaries. This paper proposes an experimental method to do it. In particular, it empirically discerns which of two particular criteria – functional versus technological – mostly enrich our understanding of the diversification strategies adopted by Italian plastic processing machinery suppliers, finding out the most instructive level of aggregation of the market segmentation – namely the best segment dimension – to investigate the firms diversification strategies.

Suggested Citation

  • Elena Santanera, 2013. "Technology and demand mechanism in firm diversification strategies.An experimental method to discriminate the fundamental drivers," CERIS Working Paper 201317, Institute for Economic Research on Firms and Growth - Moncalieri (TO) ITALY -NOW- Research Institute on Sustainable Economic Growth - Moncalieri (TO) ITALY.
  • Handle: RePEc:csc:cerisp:201317

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Rosenberg, Nathan, 1963. "Technological Change in the Machine Tool Industry, 1840–1910," The Journal of Economic History, Cambridge University Press, vol. 23(04), pages 414-443, December.
    2. David J. Teece, 2003. "Towards an Economic Theory of the Multiproduct Firm," World Scientific Book Chapters,in: Essays In Technology Management And Policy Selected Papers of David J Teece, chapter 15, pages 419-446 World Scientific Publishing Co. Pte. Ltd..
    3. Michael Gort, 1962. "Introduction to "Diversification and Integration in American Industry"," NBER Chapters,in: Diversification and Integration in American Industry, pages 3-7 National Bureau of Economic Research, Inc.
    4. Michael Gort, 1962. "Diversification and Integration in American Industry," NBER Books, National Bureau of Economic Research, Inc, number gort62-1, January.
    5. Patel, Pari & Pavitt, Keith, 1997. "The technological competencies of the world's largest firms: Complex and path-dependent, but not much variety," Research Policy, Elsevier, vol. 26(2), pages 141-156, May.
    Full references (including those not matched with items on IDEAS)

    More about this item


    firm diversification; technology; market segmentation; simulation process;

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L6 - Industrial Organization - - Industry Studies: Manufacturing

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:csc:cerisp:201317. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Anna Perin) or (Giancarlo Birello). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.