Diversification strategies and corporate conference

This paper investigates the determinants of coherence and coherence change using a sample of Italian leading firms in the period 1993-1996. Consistently with the hypotheses advanced by Teece et al. (1994), the econometric analysis highlights that relatedness between pairs of sectors and coherence of diversification strategies are higher when firms are active in sectors sharing similar technological and marketing characteristics, and when they are positioned at different stages of the productive chain. Moreover, the findings that firms which enter the group of top 5 industry leaders are more coherent than the average and that coherence is increasing for firms active in sectors more sensitive to EU integration are consistent with the prediction that coherent firms tend to outperform less coherent ones and that coherence is increasing in more competitive environments. Finally, the results show that a deepening of vertical integration strategies is good for coherence change, while an increase of diversification brings a reduction in coherence.