Exploring the impact of organizational growth via diversification

Abstract This paper explores the process and evolution of organization growth via a diversification move. Simulation experiments indicate there is a threshold effect between degree of relatedness and firm performance driven by interactions with underlying organizational processes. Relatedness, firm level resource accumulation, managerial policies, industry and market factors, are all represented within the boundary of the mathematical model presented. The results demonstrate that it is crucial to incorporate these different levels of analysis into research on such a complex organizational issue, since all of these factors play vital roles in determining the success or failure of a diversification strategy.

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