Firms' technological resources and the performance effects of diversification: A longitudinal study

  • Miller D
  • 208


    Mendeley users who have this article in their library.
  • 135


    Citations of this article.


While agency theory claims managerial self-interest creates a diversification discount, strategic theory explains that firms with certain kinds of resources should diversify. Longitudinal data on 227 firms that diversify between 1980 and 1992 reveal that the sample firms invest less in R&D and have greater breadth of technology (based on patent citations) than their industry peers prior to the diversification event. Also, acquiring firms may appear to have lower performance because of accounting conventions and because firms that use internal growth rather than acquisition pursue less extensive diversification. These findings help explain how diversification and financial performance are endogenous.

Author-supplied keywords

  • Diversification
  • Longitudinal
  • Relatedness
  • Resource-based view

Get free article suggestions today

Mendeley saves you time finding and organizing research

Sign up here
Already have an account ?Sign in

Find this document


  • Douglas J. Miller

Cite this document

Choose a citation style from the tabs below

Save time finding and organizing research with Mendeley

Sign up for free