The failure of empirical research to find unambiguous evidence that related diversification outperforms unrelated evidence points to:
A)The fact that firm performance is the outcome of many factors of which diversification strategy is only one
B)Reverse causation: it may be that poorly performing firms are more likely to take the risk of unrelated diversification
C)Difficulties in determining whether diversification is related or unrelated
D)All the above.

Question

Quizplus · Accepted Answer

The failure of empirical research to find unambiguous evidence that related diversification outperforms unrelated evidence may be due to several reasons, including the fact that firm performance is influenced by multiple factors beyond diversification strategy, the possibility of reverse causation, and the challenges in determining whether diversification is related or unrelated. Thus, all the aforementioned options explain why empirical research has not found a conclusive link between related diversification and superior performance.

The Failure of Empirical Research to Find Unambiguous Evidence That