Related diversification, firm level resources, and firm performance in the context of Australian extractive industry
Journal of Corporate Accounting and Finance
School of Business and Law
Related diversification literature highlights that the reason why corporations pursue this specific type of diversification is to achieve synergistic benefits through sharing common resources efficiently across related business units for higher financial performance. However, it is unclear whether this performance is influenced by the level of firm resources that a firm possesses. Using data from Australian extractive industry, this study assesses the heterogeneity of firm resource-possession in relation to firm performance and found that related diversified firms that possess higher resource levels extract larger proportion of synergistic advantage to enhance financial performance. The study has discussed key theoretical and practical implications.