The link between product diversification and performance among Spanish manufacturing firms: Analyzing the role of firm size

This study sheds additional light on the product diversification-performance relationship for firms in a country having recently attained an advanced economy status in our period of analysis. We assume there will be an inverted U-shaped relationship and use a sample of small, medium, and large Spanish manufacturing firms between 1994 and 2008. Our findings provide solid support for this assumption, and are identical when the sample consists of small, medium, and large firms and of large firms alone. Our results also suggest that the larger the firm, the higher the optimal level of diversification. Panel data models are used to control for unobservable heterogeneity and potential endogeneity problems. Copyright (c) 2015 ASAC. Published by John Wiley & Sons, Ltd. ResumeCette etude permet de mieux cerner la relation entre la diversification des produits et la performance au sein des firmes localisees dans un pays qui a tout recemment atteint le statut d'economie avancee. Elle pose comme hypothese que la relation entre la diversification des produits et la performance est une relation en U renverse et s'appuie sur un echantillon de petites, moyennes et grandes entreprises de fabrication espagnoles entre 1994 et 2008. Les resultats, qui valident de facon convaincante notre hypothese, restent inchanges quand on considere les petites, moyennes et grandes firmes ou uniquement les grandes firmes. Ils indiquent egalement que plus une firme est grande, plus son niveau optimal de diversification est eleve. Les modeles de donnees de panel sont utilises pour controler l'heterogeneite non observable et les problemes d'endogeneite potentiels. Copyright (c) 2015 ASAC. Published by John Wiley & Sons, Ltd.