ABSTRACT
This chapter is divided into four sections. The first provides an overview of theoretical perspectives that bear on the diversification phenomenon. It highlights the contributions that each of several efficiency-based theories – neoclassical economics (economies of scope), transaction cost economics and the resource-based view – have made to our understanding of corporate diversification. The second section reviews existing empirical studies of this phenomenon, and interprets their findings through these theoretical lenses. The third section introduces a related literature concerning technological competence. In the fourth section I suggest that the resource-based view and the technological competence literature offer potential for integration that has not yet been fulfilled. I argue that existing empirical tests of resource-based hypotheses concerning diversification, by not focusing sufficiently on the attributes of resources (as the technological competence literature does), have left a gap in the literature. This gap is the subject of the next chapter.
