“A fundamental part of any firm's corporate strategy is its choice of what portfolio of business to compete in. According to the academic literature, this decision should reflect the 'superiority' of related diversification over unrelated diversification… This is because related diversification presumably allows the corporate center to exploit the interrelationships that exist among its different businesses (SBUs) and so achieve cost and/or differentiation competitive advantages over its rivals.”

— Constantinos C. Markides

Source: "Related diversification, core competences and corporate performance", 1994, p. 149

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Constantinos C. Markides 8

Cypriot business theorist 1960

Neil Fligstein (1951) American sociologist

Source: The transformation of corporate control, 1993, p. 229

“[ Diversification strategy is] a firm’s commitment to diversity per se, together with the strengths, skills or purposes that span this diversity, shown by the way in which business activities are related one to another.”

Richard Rumelt (1942) American economist

Source: Strategy, structure, and economic performance. (1974), p. 29

“We will argue that the long-run value of a related diversification lies not so much in the exploitation of economies of scope (asset amortization) - where the benefit is primarily short-term - but in allowing corporations to more cost efficiently expand their stocks of strategic assets. Relatedness, which opens the way for asset improvement, asset creation and asset fission, holds the key to the long-run competitive advantages of diversification. This means that in most cases, similarities in the processes by which strategic assets are expanded and new assets are created are more important than static similarities between the strategic assets that are the outcome of these processes.”

Constantinos C. Markides (1960) Cypriot business theorist

Source: "Related diversification, core competences and corporate performance", 1994, p. 150

“The strategy we've adopted precludes our following standard diversification dogma. Many pundits would therefore say the strategy must be riskier than that employed by more conventional investors. We disagree. We believe that a policy of portfolio concentration may well decrease risk if it raises, as it should, both the intensity with which an investor thinks about a business and the comfort-level he must feel with its economic characteristics before buying into it. In stating this opinion, we define risk, using dictionary terms, as "the possibility of loss or injury."”

Warren Buffett (1930) American business magnate, investor, and philanthropist

1993 Chairman's Letter http://www.berkshirehathaway.com/letters/1993.html
Letters to Shareholders (1957 - 2012)

“But the net effect of increasing scale, centralization of capital, vertical integration and diversification within the corporate form of enterprise has been to replace the 'invisible hand' of the market by the 'visible hand' of the managers.”

David Harvey (1935) British anthropologist

Source: The Limits To Capital (2006 VERSO Edition), Chapter 5, Organization of Capitalist Production, p. 146

“The genius of the corporation as a business form, and the reason for its remarkable rise over the last three centuries, was - and is - its capacity to combine the capital, and thus the economic power, of unlimited numbers of people.”

Joel Bakan (1959) Canadian writer, musician, filmmaker and legal scholar

Source: The Corporation: The Pathological Pursuit of Profit and Power (2004), Chapter 1, The Corporation's Rise To Dominance, p. 8

“Prior work has shown an association between diversification strategy and profitability. This paper replicates that association using more recent and complete data and goes on to investigate the sources of the association. Theoretical arguments are advanced which predict the association which will remain once the effects of varying industry profitability are removed. Empirical tests verify this prediction and permit the discrimination between the effects of industry and diversification strategy on profitability.”

Richard Rumelt (1942) American economist

Source: "Diversity and Profitability", 1982, p. 359; Abstract

“The firm achieving focus may also potentially earn above-average returns for its industry. Its focus means that the firm either has a low cost position with its strategic target, high differentiation, or both.”

Michael E. Porter (1947) American engineer and economist

Source: Competitive strategy, 1980, p. 39

“Traditional measures of relatedness provide an incomplete and potentially inaccurate picture of the scope of exploit interrelationships between its SBUs. This is because traditional measures look at relatedness only at the industry or market level. But as we explain below, the relatedness that really matters is that between 'strategic assets' (i. e., those that cannot be accessed quickly and cheaply by nondiversified competitors.) Therefore, to accurately measure whether two businesses are related, we need to go beyond broad definitions of relatedness that focus on market similarity; we need to look at the similarities between the underlying strategic assets of the various businesses that a company is operating in.”

Constantinos C. Markides (1960) Cypriot business theorist

Source: "Related diversification, core competences and corporate performance", 1994, p. 150

“Although it may be extremely reasonable (especially from our present vantage point) to conclude that some part of human evolution, if not aspects of the diversification of hominoids in general, is indeed preserved in the fossil record of Africa, this does not in and of itself lead inexorably to the conclusion that humans and African apes are closely related.”

Jeffrey H. Schwartz (1948) American anthropologist

5 History, Morphology, Paleontology, and Evolution
Orang-utan Biology (1988)

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