Diversification And Profit Performance in the Food Processing Industry

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Diversification And Profit Performance in the Food Processing Industry
Krishna G Palepu
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It seems that firms in the sample treated the two types of diversification strategies as mutually exclusive choices. However, in terms of profitability, the two groups did not differ significantly either in 1973 or seven years later, in 1979. Also, no significant correlation between profitability in a given year and diversification of either kind in that year or subsequent years, or vice versa, seems to exist.
Hypotheses H3 a"d H3 ' : Hypothese H3 was first tested using 1973 as the base year in
... computing the growth rate in profitability. The product moment correlations and the Spearman rank order correlations of profit growth rates for the period 1974-1979 (denoted as PG(74:73) through PG(79:73) ) with the total, related, and unrelated diversifications (denoted as DT73, DR73 and DU73) in 1973 were computed and are shown in Table 10 and Table 11.
The results in these two tables show interesting patterns. The correlation between DT73 with profitability growth rate in all the years is positive page 43 but insignificant.


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