2018 Volume 25 Issue 1 Pages 137-142
Diversification strategy has been used by many firms to increase their stability and competitiveness. Different research views explain different motives, extent, pattern, and effect of diversification. However, the relationship between diversification and performance remains unclear empirically. Using the Jacquemin-Berry entropy measure, this study examines the corporate diversification and financial performance of Japanese firms in information and communications industry over the period 1999-2008. The degree of diversification has a positive relationship with per capita sales. Meanwhile, in the diversified firms progressed over a period of 5 years from 2004 to 2008, one of the measured ratios, ROA is lower than their counterparts. The paper discusses these results and offers some managerial implications, and future research opportunities are provided.
