Diversification in the international construction business

Economic globalization has created an interdependent market that allows companies to transcend traditional national boundaries to conduct business overseas. In the international construction market, companies often adopt diversification as a strategy for growth, for risk management or for both. However, the diversification patterns of international construction companies (ICCs) as a group are barely clear. The primary aim of this research is to cover this knowledge void by mapping ICCs’ diversification patterns in both business sectors and geographical dispersal. It starts from a literature review of diversification theories. Based on the review, a series of hypotheses relating to ICCs’ diversification are proposed. Data are gleaned from Engineering News-Record, i.e. Bloomberg and Capital IQ, ranging from 2001 to 2015. By testing the hypotheses, it is found that larger ICCs prefer to diversify than their smaller counterparts. Most of the ICCs tend to diversify to geographical markets with similar cultural or institutional environment. Market demands drive ICCs to diversify to different geographical markets while they are more prudential in venturing into new business sectors. The research provides not only valuable insights into diversification patterns of ICCs, but also a solid point of departure for future theoretical and empirical studies

The Performance of Private Equity Funds: Does Diversification Matter?

This paper is the first systematic analysis of the impact of diversification on the performance of private equity funds. A unique data set allows the exact evaluation of diversification across the dimensions financing stages, industries, and countries. Very different levels of diversification can be observed across sample funds. While some funds are highly specialized others are highly diversified. The empirical results show that the rate of return of private equity funds declines with diversification across financing stages, but increases with diversification across industries. Accordingly, the fraction of portfolio companies which have a negative return or return nothing at all, increase with diversification across financing stages. Diversification across countries has no systematic effect on the performance of private equity funds

Herbivory increases diversification across insect clades.

Insects contain more than half of all living species, but the causes of their remarkable diversity remain poorly understood. Many authors have suggested that herbivory has accelerated diversification in many insect clades. However, others have questioned the role of herbivory in insect diversification. Here, we test the relationships between herbivory and insect diversification across multiple scales. We find a strong, positive relationship between herbivory and diversification among insect orders. However, herbivory explains less variation in diversification within some orders (Diptera, Hemiptera) or shows no significant relationship with diversification in others (Coleoptera, Hymenoptera, Orthoptera). Thus, we support the overall importance of herbivory for insect diversification, but also show that its impacts can vary across scales and clades. In summary, our results illuminate the causes of species richness patterns in a group containing most living species, and show the importance of ecological impacts on diversification in explaining the diversity of life

Diversification and expansion in large diversified New Zealand companies : a thesis presented in partial fulfillment of the requirements for the degree of Master of Arts in Geography at Massey University

Diversification and spatial expansion are investigated in relation to eight Type III companies in New Zealand. The case companies are delimited on the basis of a three stage classification of corporate growth and organisation. The conceptual background to the thesis also includes an examination of more general aspects of corporate decision making, strategy, and the expansion and impact of firms in space. Two areas of research are examined - (a) the incidence and nature of diversification in the eight companies, and (b) spatial aspects associated with diversification and expansion. A case study approach is used to outline the diversification and spatial expansion of the companies over time. A three-fold classification of diversification is proposed: diversification within and between activity groups and diversification function. Diversification is then viewed in relation to the respective growth developments of the case companies. On the basis of these accounts, a number of conclusions are drawn on the temporal development of diversification in the spatial expansion of the eight companies. Diversification was found to be an important component in the corporate growth and geographic expansion of the case companies. Furthermore, a review of the geographic distribution of their activities suggests the companies have an important contribution to national and regional development in New Zealand

Corporate diversification and R&D intensity dynamics

We study the dynamic bidirectional relationship between firm R&D intensity and corporate diversification, using longitudinal data of Spanish manufacturing companies. Our empirical approach takes into account the censored nature of the dependent variables and the existence of firm-specific unobserved heterogeneity. Whereas we find a positive linear effect of R&D intensity on related diversification, the evidence about the effect of related diversification on R&D intensity takes the form of an inverted U. Hence, the effect of related diversification on R&D intensity is positive but marginally decreasing for moderate levels of related diversification, but such effect can turn out negative for high levels of related diversification. Additionally, the consequences of the dynamic relation are that the effects are substantially larger in the long-run than in the short-run

Creating a typology of tobacco farms according to determinants of diversification in Valle de Lerma (Salta-Argentina)

The objective of this article is to identify typical tobacco farms according to determinants of diversification that can be used to explore possibilities of diversification in the province of Salta (Northwest of Argentina). National Agriculture Census data of 278 farms in the main tobacco production area of Salta were used for the analysis. The variables selected concerning determinants of diversification were: land area, irrigation, general capital goods and specific capital goods, ownership of land, education, off-farm work, and labour availability. The analysis of the principal components applied to 16 selected variables allowed to reduce the dimensionality of the data to four components. Those components were used to apply K-means cluster approach to classify the farms. Four clusters were determined. Cluster 1 and Cluster 2 are the largest clusters. These concern highly specialized tobacco farms. They differ regarding determinants for diversification due to different levels of education of the farmer and different levels of off-farm work. Both clusters are interesting for further analysis regarding diversification alternatives to maintain or improve income and to reduce soil degradation. Cluster 3 concerns large tobacco farms being somewhat less specialized than the farms in Clusters 1 and 2. Intensive tobacco production makes this group interesting for exploring diversification alternatives to improve soil conditions. Farms in Cluster 4 already have a high level of diversification with substantial livestock production. The presence of perennial pastures suggests a better soil management than the other clusters. This cluster looks appealing to investigate what can be done regarding diversification

Geographic versus industry diversification: constraints matter

This research addresses whether geographic diversification provides benefits over industry diversification. In the absence of constraints, no empirical evidence is found to support the argument that country diversification is superior. With short-selling constraints, however, the geographic tangency portfolio is not attainable by industry portfolios. Results with upper and lower constraints on portfolio weights as well as an out-of-sample analysis show that geographic diversification almost consistently outperforms industry portfolios, although we cannot establish statistical significance. JEL Classification: G11, G15block-bootstrap tests, Diversification gains, EMU, geographic diversification, industry diversification

Diversification Preferences in the Theory of Choice

Diversification represents the idea of choosing variety over uniformity. Within the theory of choice, desirability of diversification is axiomatized as preference for a convex combination of choices that are equivalently ranked. This corresponds to the notion of risk aversion when one assumes the von-Neumann-Morgenstern expected utility model, but the equivalence fails to hold in other models. This paper studies axiomatizations of the concept of diversification and their relationship to the related notions of risk aversion and convex preferences within different choice theoretic models. Implications of these notions on portfolio choice are discussed. We cover model-independent diversification preferences, preferences within models of choice under risk, including expected utility theory and the more general rank-dependent expected utility theory, as well as models of choice under uncertainty axiomatized via Choquet expected utility theory. Remarks on interpretations of diversification preferences within models of behavioral choice are given in the conclusion