Diversification strategy, R & D/advertising strategy posture, industry structure, and firm performance : an empirical investigation /
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| Other Authors: | , , , |
| Format: | Thesis Book |
| Language: | English |
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1989.
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| Online Access: | Link to OAKTrust copy |
| Abstract: | The study hypothesized that firms which diversified largely into structurally similar industries (SSD firms) within the generic industry sector (R&D intensive or advertising intensive industries) and maintained a strategy of relatively high R&D intensity (RDI)/ advertising intensity (ADVI), will outperform firms pursuing strategies of structurally dissimilar diversification (SDD firms) and/or a strategy of relatively low R&D intensity (RDNI)/advertising intensity (ADVNI). It was further postulated that firms which consistently followed a strategy of structurally similar diversification and maintained a relatively high level of R&D intensity over the long term would achieve superior performance compared with any other combination of strategies. Firms based in two sets of industries, the R&D intensive generic industry sector (N=121) and the advertising intensive generic industry sector (N=61), were analyzed. The performance of the firms was examined over the period 1969-1983, the three five-year periods, and the two ten-year periods in terms of return on assets, return on equity, return on total capital, and sales growth rate. Analysis of Covariance was employed to adjust for industry effect and firm size. It was found that structurally similar diversification in itself, or a strategy of relatively high R&D/advertising intensity in itself, although profitable, was no guarantee for continued superior performance. However, SSD firms which were also relatively more R&D/advertising intensive over the long term significantly outperformed SDD firms that were relatively less R&D/advertising intensive. Performance differences in the R&D sector between SSD-RDI firms and other categories of firms were more pronounced than performance differences among corresponding categories in the advertising intensive sector. Whereas the RDI firms did better than the RDNI firms, the ADVI firms had no edge over the ADVNI firms. The study suggests that in both the generic sectors, diversifying into structurally similar industries is desirable, but high relative intensity seems to be more appropriate for the R&D sector than it is for the advertising sector. The study reveals differing effect of direction and relative intensity on performance across the three five-year periods, suggesting caution in interpreting and extrapolating results from short-term studies. |
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| Item Description: | Typescript (photocopy). Vita. "Major subject: Marketing." |
| Physical Description: | xxv, 325 leaves : illustrations ; 29 cm |
| Bibliography: | Includes bibliographical references. |