We analyze the impact of product diversification on
performance. This topic has been discussed in the
literature, and there is no consensus so far as to the
significance or the direction of the impact. Performance
is measured using Tobin's q for a sample of 103 large,
non-financial Spanish firms (1992-1995). Diversification
is measured by means of a categorical variable, as
suggested by Varadarajan. The principal results indicate
that the firms with intermediate levels of product
diversification have the highest performance, while the
firms with low and high levels of diversification show
significantly lower performance, which performance is
not significantly different between them. Abstract.
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