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DIVERSIFICATION

Statistics Directorate    
Definition:
Diversification refers to the expansion of an existing firm into another product line or market. Diversification may be related or unrelated.

Context:
Diversification may arise for a variety of reasons: to take advantage of complementarities in production and existing technology; to exploit economies of scope; to reduce exposure to risk; to stabilize earnings and overcome cyclical business conditions; etc. There is mounting evidence that related diversification may be more profitable than unrelated diversification.

Source Publication:
Glossary of Industrial Organisation Economics and Competition Law, compiled by R. S. Khemani and D. M. Shapiro, commissioned by the Directorate for Financial, Fiscal and Enterprise Affairs, OECD, 1993.

Cross References:
Related diversification
Unrelated diversification

Hyperlink:
http://www.oecd.org/dataoecd/8/61/2376087.pdf

Statistical Theme: Financial statistics

Created on Thursday, January 03, 2002

Last updated on Sunday, March 17, 2002