Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/326619 
Year of Publication: 
2024
Citation: 
[Journal:] Cogent Business & Management [ISSN:] 2331-1975 [Volume:] 11 [Issue:] 1 [Article No.:] 2414861 [Year:] 2024 [Pages:] 1-19
Publisher: 
Taylor & Francis, Abingdon
Abstract: 
Prior research has reported mixed findings regarding the relationship between diversification and firm performance, because a diversification strategy produces not only synergies but also anti-synergies. We argue that information technology (IT) can help unlock the potential of diversification to enhance firm performance by maximising its synergistic effect while minimising its anti-synergistic effect. Using a sample of publicly listed Chinese firms on the Shanghai or Shenzhen Stock Exchange, we find that IT investment positively moderates the relationship between diversification and firm performance. Investing in IT contributes to greater coordination, control, information exchange, and cross-business knowledge sharing, which can enhance the synergistic effect of diversification and mitigate its anti-synergistic effect. Furthermore, we find that the moderating effect of IT investment on the relationship between diversification and firm performance is stronger for related diversification than unrelated diversification, indicating a greater need for IT when undertaking related (vs unrelated) diversification. These findings contribute to a more comprehensive understanding of the relationship between diversification and firm performance. Moreover, we advance research by showing that the moderating effect of IT on the relationship between diversification and firm performance varies according to diversification strategy.
Subjects: 
Diversification strategy
related diversification
unrelated diversification
firm performance
IT investment
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

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