ABSTRACT
Organizations continuously make choices about the set of business activities to pursue, and diversifi cation into new lines of business is a common strategy for pursuing organizational growth. Corporate diversifi cation enables fi rms to transcend the limitations imposed by a decreasing product-demand curve as their core business reaches the mature and decline phases of the product or industry life cycle. Over time, shifts in diversifi cation strategy often result in dramatic changes in a fi rm’s product mix. The potential for fi rms to create competitive advantages through diversifi cation by exploiting economies of scope is a central research topic in the fi eld of strategic management (see Ramanujam and Varadarajan 1989 and Hoskisson and Hitt 1990 for reviews of this extensively researched area).
