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  • Publication
    Diversification Strategies and Firm Performance: The Impact of Corporate Management Capabilities
    (Academy of Management (AOM), 2008-08-11) ;
    Following a capability-based view of the firm, we argue that the inconsistent findings on the relationship between horizontal diversification and firm performance may result from a lacking focus of the literature on the role of the corporate management. Based on a sample of 164 European financial institutions we find a significant curvilinear relationship between diversification and market-based performance (Tobin's Q), but not for diversification and accounting-based performance (ROI). Our results indicate, however, that multibusiness firms benefit from a corporate management capability to foster cross-business collaboration and from a risk management capability. This research therefore contributes to a managerial perspective on corporate diversification.