Related Diversification Using Core Competencies in South Korean Dairy Industry

This study aims to examine how unrelated diversification facilitate firm’s growth and innovation. To achieve this goal, we investigate how Maeil Dairies has diversified through open innovation as the Korean dairy market struggles to maintain its size. Maeil Dairies, one of the top three conglomerates in the Korean dairy industry, has gone through different forms of diversification both related and unrelated to its core competencies. This study presents what the overlapping competencies are in its diversified products and businesses, analyzes the effectiveness of diversification in terms of relatedness, and examines the need for unrelated diversification. By analyzing the four diversification categories of the Maeil Dairies case and applying diversification theory, this study shows that although related diversification is more recommendable in most circumstances, unrelated diversification may present new opportunities and is necessary in order to avoid stagnation and falling behind.

An agent of change against all odds? The case of Ledger in Vierzon, France

The literature in economic geography is increasingly interested in the role of human agency in local and regional development. The understanding of the role of agents of change on path development is especially critical for small- and medium-sized towns (SMSTs), which tend to be less diversified and to have fewer localised capabilities. The town of Vierzon in the Centre-Val-de-Loire region in France is a medium-sized old industrial town in a structural crisis. It is suffering from deindustrialisation, population decline, unemployment and poverty. This article takes a micro-perspective with a case study approach to explore the creation and growth of Ledger – a frontier blockchain start-up that designs, produces and commercialises hardware wallets for cryptocurrencies – against all odds in Vierzon, France. It underlines the role of a Window of Locational Opportunity, agency, chance, the broader institutional context in the location of Ledger in an unlikely place and subsequent unrelated diversification and path creation. It contributes to the debate on the interplay between agency and structure by linking agents of change in SMSTs to the broader institutional context and to the understanding of the emergence of place-based leadership.

Study on the Impact of Industrial Agglomeration on Ecological Sustainable Development in Southwest China

Southwest China is a fragile terrestrial ecosystem restricted by its geological background, which leads to a contradiction between its industrial economic development and the ecological environment. In this study, to explore the influence and mechanisms of the three industrial agglomeration modes, namely, specialization, related diversification, and unrelated diversification, on the eco-efficiency of the region, linear and nonlinear regression models were applied to the data of five Southwest provinces from 2006 to 2018. Specialization agglomeration had a significant negative impact on the eco-efficiency of four provinces outside Tibet in Southwest China. With the decrease of industrial specialization, their eco-efficiency improved. The effects of related diversification agglomeration on the ecological efficiency of four provinces outside Tibet in Southwest China showed a “U” curve. The degree of industrial diversification in these provinces exceeded the critical value of 1.46, and the effect on eco-efficiency was shown. The unrelated diversification agglomeration had a negative effect on the ecological efficiency of the four provinces outside Tibet in Southwest China. The degree of industrial-unrelated diversification in Guizhou Province increased slightly, which was not conducive to the improvement of local eco-efficiency. Additionally, it decreased significantly in other provinces, which caused the improvement of local eco-efficiency. The conclusion provides a theoretical basis for industrial green transformation path selection and related policy formulation in Southwest China.

Symmetric Modeling of Diversification Strategy and Organizational Structure on Financial Performance: Evidence from China

Diversification is a strategy adopted by many enterprises in the process of expansion. The success of the diversification of an enterprise mainly depends on the choice and implement of strategy; choosing an organizational structure that fits the type of diversification strategy used is fundamental to improving financial performance. Based on the empirical research method, this study establishes a symmetric model of diversification strategy and organizational structure on financial performance and selects data from 613 A-share-listed companies in China, from 2012 to 2016, to test the impacts of unrelated and related diversification strategies on financial performance, as well as the moderating effects of united company, holding company, and multidivisional structures on such relationships. The results show that there is asymmetry between the diversification strategy adopted and financial performance, and a related diversification strategy should be adopted as a priority; the symmetry of an unrelated diversification strategy and holding company structure on financial performance is partially confirmed, and other elements should be adopted, simultaneously, to improve this symmetry; a related diversification strategy and multidivisional structure on financial performance is symmetric. The above findings will provide references for the diversification strategy choice and the organizational structure design of enterprises.

What Type of Industrial Agglomeration Is Beneficial to the Eco-Efficiency of Northwest China?

The contradiction between industrial economic development and the ecological environment in Northwest China is prominent, so the green transformation of industrial economy in this region is imperative. From the perspective of industrial ecology, this study uses economic and environmental statistics from Northwest China from 2006 to 2018 as well as the Krugman specialization index and entropy index methods to calculate the degree of different types of industrial agglomeration in Northwest China. The eco-efficiency of Northwest China is calculated by the global SBM-DDF model. On this basis, the stochastic effect panel tobit regression model is used to analyze the influence and mechanism of different types of industrial agglomeration on eco-efficiency in Northwest China. The results show that the concentration of specialization has a significantly negative effect on the eco-efficiency of Northwest China at the level of 1%. Excepting Ningxia, the eco-efficiency of other provinces has been improved with the decrease of industrial specialization. The influence of the related diversification agglomeration on the eco-efficiency in Northwest China shows a U curve. The degree of industrial correlation diversification in Qinghai and Ningxia is less than the critical value 1.45, whereas Shaanxi, Gansu, and Xinjiang have crossed the inflection point. The unrelated diversification agglomeration has a negative effect on the eco-efficiency of Northwest China at the level of 1%, and the degree of industrial independent diversification in Shaanxi Province has decreased slightly, which is beneficial to the improvement of eco-efficiency. By contrast, other provinces have increased considerably. The conclusion can provide a theoretical basis for industrial green transformation path selection and related policy formulation in Northwest China.

Group affiliation and corporate debt maturity: Co-insurance or expropriation

PurposeWe examine how business group affiliation affects corporate debt maturity.Design/methodology/approachThis study employs the financial data of all listed Indian companies obtained from the CMIE database for 2011–2018. The ordinary least square, firm-fixed effect and Fama–Macbeth regression methods are used for empirical analysis. We use propensity score matching and difference-in-difference method to address endogeneity issues. Further, two-stage least square (2SLS) regression is performed to mitigate the endogeneity that stems from simultaneity between debt maturity and leverage.FindingsUsing Indian firms, we report that group affiliation is positively associated with corporate debt maturity; group firms use more long-term debt compared to similar standalone firms. We also observe that the positive effect of group affiliation on debt maturity is more pronounced in business group firms associated with a group having more resources and having unrelated diversification. However, information asymmetry and moral hazard problems weaken the impact of group affiliation on debt maturity structure of a firm. Overall, our results are consistent with co-insurance benefits that are an argument for the presence of business groups in emerging markets.Originality/valueThis study contributes to the existing literature by testing the role of group affiliation on corporate debt maturity decisions in the Indian market context where market imperfections persuade firms to borrow from banks. This is also the first study on determinants of corporate debt maturity that distinguishes between public and private debt.

Benefits or costs? The effects of diversification with cross-industry knowledge on corporate value under crisis situation

Purpose This paper aims to explore the explanations of “information effect” and “agency effect” of corporate diversification with cross-industry knowledge under a crisis situation. Design/methodology/approach Based on an event study of 203 public companies’ crises in China between 2008 and 2018, the authors verify the information and agency effects of corporate diversification under a crisis situation by, respectively, examining the effects of interactions of corporate unrelated diversification with corporate transparency and knowledge deficiency attribution on the stock market’s responses to the crises. Findings It is found that corporate unrelated diversification serves as a buffer in protecting firm value while attribution of knowledge deficiency can be a burden. The buffering effect is stronger when the corporate transparency is higher but weaker when the crisis is attributed to be caused by corporate tacit knowledge deficiency. Practical implications Unrelated diversified firms should strengthen information communication with stakeholders so as to break down the stakeholders’ cross-industry knowledge barriers, and thus protect their own value at the crisis’ onset. Also, they can further buffer the loss by reducing stakeholders’ perceptions of the corporate tacit knowledge deficiency revealed in the crisis. Originality/value This study is the first to illustrate that the information and agency effects of corporate diversification strategy can be partially explained under a crisis situation, which provides meaningful insights about how firms can conduct knowledge management in their daily operations to deal better with corporate crises.

Product diversification and large construction firm productivity: the effect of institutional environments in Malaysia

PurposeMany large construction firms (LCFs) adopt product diversification (PD) to counter downturns and spread risks. However, no detailed information is available concerning the type of PD that improves their performance. In addition, it is still uncertain how much changes in institutional dimensions influence the effectiveness of PD. Therefore, the aim is to resolve this issue by establishing a model that shows the extent of this influence.Design/methodology/approachThe generalised method of moments (GMM) estimator is used to model the PD strategies of 86 LCFs in Malaysia over 14 years (2003–2016) and its impact on productivity and profitability performance.FindingsUnrelated diversification (UD) decreased firm performance in 2003–2016, while related diversification (RD) had a positive impact during the more liberal 2010–2016 phase. The models show that the impact of PD is highly dependent on changes in institutional dimensions.Practical implicationsFirstly, managers may adjust the type of PD and its level of diversification to improve firm performance. Secondly, they may devise PD strategies based on changes in institutional dimensions to maximise their effectiveness.Originality/valueThe study contributes to the literature by determining the optimal amount of PD (including RD and UD) and its impact on performance. Secondly, the study is the first to investigate the moderating relationship of the institutional dimensions of economic and regulatory institutions on PD-firm performance. Thirdly, the study is the first to explore the components of technical-scale-scope economies (movement towards and around the production frontier), this being crucial to the strategy that was only conjectured in previous studies.