Purposive Diversification and Economic Performance

Exploring hypotheses about purposive diversification and ensuing economic performance, this study offers insights into the debate about cooperation versus competition among firms.

John T. Scott (Author)

9780521022583, Cambridge University Press

Paperback / softback, published 10 November 2005

284 pages, 21 b/w illus. 32 tables
22.9 x 15.4 x 1.8 cm, 0.423 kg

'John Scott has produced an encompassing work on the incentives for diversification and its ramifications … The book is good. It is specific to the topic of purposive diversification. But within that topic, it is complete.' David I. Rosenbaum, Review of Industrial Organization

This book examines product-line diversification in large manufacturing firms. It introduces and applies a methodology that discerns groups of manufacturing industries related by complementarities in production, marketing, distribution, and research and development (R&D) activities. Manufacturing firms intentionally vary production to exploit these complementarities, and Professor Scott uses evidence from US manufacturing to explore hypotheses about such purposive diversification and ensuing economic performance, including product diversification's effects on both static efficiency and the optimality of R&D investment. The study offers insights into the policy debate about cooperation versus competition among firms: will industrial performance be better if leading firms cooperate on research, production, and marketing? Professor Scott shows that the answers depend on circumstances that vary with different industrial environments. His analysis offers insights about business strategy and public policy toward business combinations in conglomerate, vertical, and horizontal mergers and in cooperative R&D ventures.

Introduction: An overview
Part I. Static Efficiency and the Diversified Firm: 1. The multimarket firm
2. Theories linking multimarket contact and market power
3. Diversifying mergers and strategic congruence
4. Multimarket contact and resource allocation
5. The market power of diversifed oligopolists
Part II. Firm and Industry Effects Versus Traditional Models: 6. Profitability effects
7. R & D intensity effects
Part III. Dynamic Efficiency and the Diversified Firm: 8. Theories linking diversification and the R & D investment
9. Diversification of R & D and productivity
10. Multimarket rivalry and R & D intensity
11. Research diversity induced by rivalry
Part IV. Industrial Policy: 12. Diversification versus cooperation in R & D
13. From cooperative research to cooperative production
14. Damoclean taxation and innovation
Afterword: perspectives through time and across countries
Notes
References
Index.

Subject Areas: Development economics & emerging economies [KCM]