Diversification and performance of Japanese IT subsidiaries: a resource-based view

This paper examines the relationship between corporate diversification and performance for Japanese subsidiaries in the information technology (IT) industry. In particular, it reports on our study which drew on the resource-based view of the firm to make the distinction between related and unrelated diversification. Data for more than 5 years were used to test our hypotheses. The results suggest that related subsidiaries out-perform unrelated subsidiaries on a number of dimensions including: performance, survival, and employee productivity growth. The study also found support for resource-based arguments suggesting that related diversification in knowledge-based (tertiary) industries, such as IT, plays a more important factor in firm success than in primary or secondary industries.