Academy of Management Annual Meeting Proceedings includes abstracts of all papers and symposia presented at the annual conference, plus 6-page abridged versions of the “Best Papers” accepted for inclusion in the program (approximately 10%). Papers published in the Proceedings are abridged because presenting papers at their full length could preclude subsequent journal publication. Please contact the author(s) directly for the full papers.

The Value of Unrelated Diversification: The Role of Industry- and Firm-Level Financial Contingencies

    Building on the view of unrelated diversification as a response to market inefficiencies, this paper advances a contingency framework for the unrelated diversification-performance relationship in financially weak contexts. We propose that market-, industry-, and firm-level financial factors influence this link. Based on a unique panel dataset of Italian firms for the period 1980-2010, our results support our core assumption that unrelated diversification is a performance-increasing strategy in a context characterized by weak financial markets. Greater industry external financial dependence and greater firm financial constraints enhance the performance effects of unrelated diversification. However, as the capital markets develop, the moderating effects of firm financial constraints appear to weaken.

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