The hypothesis that will be addressed in this research paper is that product diversification has an effect on firm performance. More specifically this proposed relationship will be an inverted-U, meaning that diversification will increase performance up to an optimal level, at which point more diversification will cause performance to decrease. The variables included in the conceptual model are firm performance as the dependent variable and then firm size, economies of scale, capital intensity, competition, industry growth, and most importantly diversification as the independent variables. A multivariate OLS regression model will be used to analyze the relationship empirically. The data set used for this study consists of over 1000 manufacturing firms compiled from the Compustat database. The results from the empirical study show no statistically significant relationship between diversification and firm performance.


Sell, John

Second Advisor

Duffus, LuAnn


Business Economics


Business Administration, Management, and Operations | Business and Corporate Communications


diversification, firm performance

Publication Date


Degree Granted

Bachelor of Arts

Document Type

Senior Independent Study Thesis



© Copyright 2014 Kendall E. DeBoer