Corporate Diversification and Firm Performance: an Empirical Study
Corporate Diversification and Firm Performance: an Empirical Study

Summary/Abstract: The importance of diversification and performance in the strategic management literature is widely accepted among academics and practitioners. However, the proxies for performance and diversification that have been employed in past strategy research has not been unanimously agreed upon. Given the current state of confusion that exists with regard to the impact of corporate diversification on firm performance, the present paper seeks to add to this body of knowledge and help resolved some discrepancies. This study examines the impact of corporate diversification on firm performance in selected Nigerian companies.The reason for increased interest in diversification has always been on the possibility that diversification is related to corporate performance. However, while this topic is rich in studies, empirical evidences emerging from various studies about the effect of diversification on performance have so far yield mixed results that are inconclusive and contradictory. In addition, despite the existence of these studies, very little attention has been given to the companies in developing countries including Nigeria. This means that there is a major gap in the relevant literature on developing countries which has to be covered by research. This research attempts to fill this gap by studying the situation of the Nigerian companies and providing more empirical evidence on the effects of corporate diversification on firm performance based on individual company-level data. Survey research design was adopted in this study with the application of simple random sampling technique in selecting our case study companies as well as our respondents. Primary data were collected through questionnaire. Data were analysed through descriptive statistics and correlation and coefficient of determination were used to test our hypotheses. It was discovered that diversification impacted performance of these companies positively and we recommend that these companies should engage in geographical diversification in addition to other forms of diversification they are currently involved in for maximum performance.

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