Firm-specific antecedents affecting product diversification: evidence from India

Abstract

The main purpose of this paper is to introduce what affects the firm to diversify. This paper is based on an empirical analysis of a sample of 453 manufacturing companies in India. Jacquemin-Berry Entropy-Index measure has been used to measure diversification; whereas to determine the factors affecting diversification strategy, Panel Tobit Regression Analysis has been applied. The research findings indicate that firm-specific antecedents influence the decision to diversify. Corporate managers should follow a prudent behaviour while adopting strategic planning for the growth of the company. Managers should have to conduct proper statistical analyses to find out a firm’s optimal level of corporate diversification for maximising the firm performance.

Keywords:

• Diversification
• entropy index measure
• Tobit regression
• India
• firm performance

JEL CLASSIFICATION CODES:

• F23
• M16
• M19

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Notes on contributors

Anu Thakur

Dr. Anu Thakur is working as an Assistant Professor in School of Management, Bennett University, Greater Noida, Delhi-NCR, India. She has done her Ph.D. in the field of Strategic Management. Her areas of teaching and research interests are Finance, Accounting and Strategic Management. She has publications in both national and international journals.

Aparna Bhatia

Dr. Aparna Bhatia is working as an Assistant Professor in the Department of Commerce, Guru Nanak Dev University, Amritsar, Punjab, India. She has done her Ph.D. in the field of Strategic Management. Her areas of teaching and research interests are accounting and strategic management. She has more than a dozen publications in both national and international journals.