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Examines the selection and diversification of market segments for robotics products with respect to application areas and customer sectors.
Abstract
Purpose
Examines the selection and diversification of market segments for robotics products with respect to application areas and customer sectors.
Design/methodology/approach
This study attempted to investigate the selection and diversification of market segments by 50 robotics firms in the US with respect to application areas and customer sectors that they serve. Based upon the concept of strategic groups, we classified those robotics firms into three distinct strategic groups along the dimensions of application area diversification and customer sector diversification. The three strategic groups were identified as high, moderate, and low diversification groups, with respect to both application areas and customer sectors.
Findings
The results show that robotics firms vary in their selection of application areas and customer sectors, and more importantly in the degree of diversification of application areas and customer sectors. Also, three distinct strategic groups are observed among them, based upon the degree of diversification of application areas and customer sectors.
Research limitations/implications
A few limitations are recognized in this study. First, we used only the dimensions of market segment diversification in classifying the strategic groups in the US robotics industry. Given the important role of technology in the industry, we may consider pairing market dimensions with technology dimensions in exploring any strategic groups in the industry. Second, we only tested for the existence of strategic groups in the industry. We may further consider investigating the factors or reasons for the differences between the strategic groups, as well as any performance differences between the strategic groups. In studying the firm's performance, it is desirable to utilize financial performance measures such as sales growth and profitability. But securing such financial performance measures for individual robotics firms is hampered by the consolidated financial results of diversified firms and the presence of privately held firms in the industry. Third, we used data compiled from a secondary source. We may consider collecting time‐series data directly from robotics firms. These limitations are not certainly exhaustive but rather important ones for future research.
Practical implications
Given the limited studies on robotics firms and their strategy, the results should be of interest to those who formulate product strategy in the robotics market.
Originality/value
The issues of diversification of market segments and the resultant strategic groups that we examined are well worth trying to understand for more viable market strategy in the field. Particularly, the identification of such strategic groups in the industry would help robotics firms evaluate their competitive positions, as well as competitors' approach to the market place.
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Michael A. Brost and Brian H. Kleiner
Although there are many variations in the definition of diversification, it would be only appropriate to provide some form of definition for the reader. Corporate diversification…
Abstract
Although there are many variations in the definition of diversification, it would be only appropriate to provide some form of definition for the reader. Corporate diversification in its broadest sense can be defined simply as the entering into a new business activity by an existing business entity. This definition is expounded upon by many of the leading corporate diversification researchers to include references to the method of entering the new business (whether it be through acquisition, internal development, etc.), the driving forces behind the diversification (i.e., synergy, resource sharing, risk reduction), and the levels of relatedness between the company's present product line and market to that of the new businesses' products and markets.
The purpose of this paper is to explore the relevance of diversification in the strategic management of libraries.
Abstract
Purpose
The purpose of this paper is to explore the relevance of diversification in the strategic management of libraries.
Design/methodology/approach
The literature is examined to identify issues attached to diversification and also examples where libraries have pursued this strategy. Lessons that can be learned from other sectors regarding diversification are presented and their relevance for libraries considered.
Findings
The paper finds that diversification is relevant for libraries because of increased competition in places where people can access information. It provides a way to grow and develop. Various diversification approaches exist and they all have a level of risk. Extra resources are also necessary when diversification is pursued. Library managers have to be able to judge when the risks in diversification are justified.
Originality/value
The paper provides food for thought for library practitioners in the use of diversification in developing future services.
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Much prior work involving director incentives and corporate behaviour has been focussing on their absolute dollar value or the intrinsic value and generated mixed findings…
Abstract
Purpose
Much prior work involving director incentives and corporate behaviour has been focussing on their absolute dollar value or the intrinsic value and generated mixed findings. Comparison theories, however, suggest that the relative value of an incentive may be the main drive for individual performance. This study attempts to investigate the role of director relative pay in promoting the board’s intervention with unrelated diversification decisions.
Design/methodology/approach
The analysis uses data from firms operating in more than one segment during the period from 1999 to 2019. Data were obtained from WRDS databases. Ordinary least squares (OLS) regression analysis and the two-stage system generalized method of moments (GMM) were run to test the hypotheses. To test the robustness of the findings, alternative proxies for the key independent variables were used in separate analyses.
Findings
The results support the hypothesis that unrelated diversification negatively impact firm performance, while higher director relative pay will help reduce unrelated business diversification. The absolute director pay, however, has no significant impact on corporate strategic choices. The results also highlight the moderating effect of director overcompensation. Director overcompensation will cancel out the impact of relative director pay on unrelated diversification.
Originality/value
This study takes a fresh theoretical perspective by framing the investigation using the dimensional comparison theory to address the single untended comparison framework in the director pay structure – the intra-individual framework. It is the first to investigate the role of director relative pay in corporate strategic choices. The findings support the contention that the relative value of the incentive is an important indicator of the effectiveness of the pay.
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Wensong Bai, Mikael Hilmersson, Martin Johanson and Luis Oliveira
The authors seek to advance the understanding of small- and medium-sized enterprise (SME) internationalization at the regional level and examine the role of home market…
Abstract
Purpose
The authors seek to advance the understanding of small- and medium-sized enterprise (SME) internationalization at the regional level and examine the role of home market institutions in this process.
Design/methodology/approach
The authors analyze hypotheses with data from SMEs in five country markets and from the Global Entrepreneurship Monitor. A cluster analysis establishes the regional diversification patterns (based on regional diversification scope, speed and rhythm) and a multinomial regression tests the effect of home market institutions on their adoption.
Findings
The results offer a refined picture of SME regional diversification by revealing three patterns: intra-regionally focused firms, late inter-region diversifiers and early inter-region diversifiers. They also suggest that the adoption of these patterns is determined by SMEs' home market institutions.
Originality/value
The authors develop a nuanced understanding of SME internationalization by building upon and expanding the regionalization rationale in the internationalization patterns literature. Additionally, the authors address the acknowledged, yet rarely investigated, country-level determinants of internationalization patterns.
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Yasir Ashraf and Mian Sajid Nazir
The income structure of banks has undergone a notable change in recent decades; therefore, non-interest-based activities have gained much attention. This paper aims to examine…
Abstract
Purpose
The income structure of banks has undergone a notable change in recent decades; therefore, non-interest-based activities have gained much attention. This paper aims to examine the impact of income diversification on bank performance in Pakistan.
Design/methodology/approach
A balanced panel data set of 20 Pakistani commercial banks is used from 2007 to 2020. The random effect model is employed to test the relationship between income diversification and financial performance.
Findings
The empirical results indicate a significant positive impact of income diversification of banks on risk-adjusted returns on assets and equity. Moreover, while banks' risk-adjusted profit performance improves with the increase in bank size, equity ratio and loan ratio, it deteriorates with high credit risk and technology. However, geographical diversification does not explain financial performance in all the risk-adjusted return on equity models. Among the macroeconomic factors, the interest rate influences bank risk-adjusted returns positively, whereas gross domestic product and inflation rate have a negative effect on banks' financial performance.
Originality/value
To the best of the author's knowledge, this study is the first to empirically investigate the relationships between income diversification and the risk-adjusted profits of Pakistani-listed commercial banks. This study has implications for regulators and policymakers of commercial banks.
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Adedotun Joseph Adenigbo and Olayemi O. Simon-Oke
The increasing growth in global trade is promoting economic diversification through efficient air cargo logistics. The overdependence of Nigeria on mono-product export, mainly…
Abstract
The increasing growth in global trade is promoting economic diversification through efficient air cargo logistics. The overdependence of Nigeria on mono-product export, mainly crude oil, hinder the successful implementation of economic diversification policy. However, air cargo export plays a significant role in any successful economic diversification policy. Despite the importance of air export of cargo to the economy, literature is scarce on the role of air cargo export in economic diversification studies. This chapter assesses the performance of air cargo export by highlighting its inherent opportunity to support economic diversification in Nigeria. The analysis draws on air cargo export data by volume, types, and airline market share in Nigeria. Regression analysis established a significant relationship between Nigeria's gross domestic product (GDP) and air cargo export. Johansen cointegration test showed that both short and long-run cointegration exists between air cargo and GDP in Nigeria. An increasing trend in Nigeria's air cargo export volume indicates the significance of air cargo export to support economic diversification policy in Nigeria. Airlines market shares have British Airways, Virgin Atlantic, Emirates, and Saudi Air dominating the exportation of cargo in Nigeria. Agricultural products dominate the air cargo export with 34.6% volume, followed by manufacturing products (23.6%). An all-inclusive policy that promotes international trade for the economic emancipation of Nigeria through diversification into agriculture and manufacturing sectors is necessary.
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Niron Hashai, Tamar Almor, Marina Papanastassiou, Fragkiskos Filippaios and Ruth Rama
This chapter examines the interrelationships between internationalization and product diversification among the world's l35 largest food and beverage enterprises. Based on the…
Abstract
This chapter examines the interrelationships between internationalization and product diversification among the world's l35 largest food and beverage enterprises. Based on the argument that food and beverage enterprises enjoy economies of scope when moderately diversifying into new countries and product areas, but encounter resource constraints when extremely diversified and internationalized, we expect to find an inverted U-shaped relationship between the two strategies. Nevertheless, we find that the relationships between the two strategies show both an inverted U-shaped (when geographic diversification is the dependent variable and product diversification the independent one) and a U-shaped pattern (when product diversification is the dependent variable and geographic diversification the independent one). These results imply that the relationships between internationalization and product diversification among food and beverage enterprises are more complex than currently conceived.
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Islam Ibrahim and Heidi Falkenbach
This study aims to investigate the impact of international diversification on the value and operating efficiency of European real estate firms.
Abstract
Purpose
This study aims to investigate the impact of international diversification on the value and operating efficiency of European real estate firms.
Design/methodology/approach
The study is conducted using a panel fixed effects regression model to estimate the relationship of international diversification with firm value and operating efficiency. International diversification is mainly measured via the negative of the Herfindahl–Hirschman Index (HHI) using property-level data. Firm value and operating efficiency are proxied by financial ratios observed annually from 2002 to 2021 at the firm level.
Findings
The results demonstrate that international diversification has a negative effect on firm value. Additionally, it lowers operating efficiency by weakening a firm's ability to generate operating earnings from its assets. By examining whether the reduction in operating efficiency is due to the rental income channel or the capital gains channel, the authors find strong statistical evidence that international diversification negatively impacts capital gains. International diversification is negatively associated with net gains from property valuations (unrealized capital gains) and net profits from property disposals (realized capital gains).
Research limitations/implications
The empirical analysis is limited to Europe.
Originality/value
This paper extends the geographical diversification literature. While existing literature focuses on domestic diversification within the United States, this paper explores the effects of international diversification on European real estate firms. To the extent of the authors' knowledge, this is the first paper to examine the impact of geographical diversification on capital gains.
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Nikolaos Kavadis and Xavier Castañer
To show that differences in the extent to which firms engage in unrelated diversification can be attributed to differences in ownership structure.
Abstract
Purpose
To show that differences in the extent to which firms engage in unrelated diversification can be attributed to differences in ownership structure.
Methodology/approach
We draw on longitudinal data and use a panel analysis specification to test our hypotheses.
Findings
We find that unrelated diversification destroys value; pressure-sensitive Anglo-American owners in a firm’s equity reduce unrelated diversification, whereas pressure-resistant domestic owners increase unrelated diversification; the greater the firm’s free cash flow, the greater the negative effect of pressure-sensitive Anglo-American owners on unrelated diversification.
Research limitations/implications
We contribute to corporate governance and strategy research by bringing in owners’ institutional origin as a shaper of owner preferences in particular with regards to unrelated diversification. Future research may expand our investigation to more than one home institutional context, and theorize on institutional origin effects beyond the dichotomy between Anglo-American and non-Anglo-American (not oriented toward shareholder value maximization) owners.
Practical implications
Policy makers, financial analysts, owners, and managers may want to reflect about the implications of ownership structure, as well as promoting or joining corporations with particular ownership configurations.
Social implications
A shareholder value-destroying strategy, such as unrelated diversification has adverse consequences for society at large, in terms of opportunity costs, that is, resources could be allocated to value-creating activities instead. Promoting an ownership configuration that creates value should contribute to social welfare.
Originality/value
Owners may not be exclusively driven by shareholder value maximization, but can be influenced by normative beliefs (biases) stemming from the institutional context they originate from.
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