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“What Is the Relationship Between Diversification and Performance, Particularly in Emerging Economies? What Are the Factors Which Are Relevant for Setting the Contents of That Relationship?”

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“WHAT IS THE RELATIONSHIP BETWEEN DIVERSIFICATION AND PERFORMANCE, PARTICULARLY IN EMERGING ECONOMIES? WHAT ARE THE FACTORS WHICH ARE RELEVANT FOR SETTING THE CONTENTS OF THAT RELATIONSHIP?” By

João de Almeida Frazão Caro de Sousa

Master Thesis

Submitted to ESADE Business School in fulfilment of the requirements for the Degree of

Master of Science in International Management

ESADE Business School May 2012

Master of Science in International Management – ESADE Business School

i
Master of Science in International Management – ESADE Business School

Table of Contents
Introduction ..................................................................................................................................... 1 Theoretical Background 1. Diversification ......................................................................................................................... 5 1.1 General Observations ........................................................................................................ 6 1.2 Different types of diversification strategies....................................................................... 7 1.3 The costs and benefits of diversification ........................................................................... 8 1.4 Diversification Trends ....................................................................................................... 9 A. The Lack of Significant Relationship ........................................................................... 11 B. The Linear Model .......................................................................................................... 12 C. Curvilinear Models ........................................................................................................ 13 C.1. The Inverted U Model

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