IMPACTS OF DIVERSIFICATION AND CORPORATE ENTREPRENEURSHIP STRATEGY MAKING ON GROWTH AND PROFITABILITY: A NORMATIVE MODEL

Abstract

Diversification strategy is an important driver of organizational conduct and performance. Despite its recognized linkage to other strategy-making elements, such as corporate entrepreneurship, research has devoted minimal attention to explicitly investigating relationships among diversification, corporate entrepreneurship and performance elements. This study contributes to a better understanding of diversification strategy driven corporate entrepreneurship and performance by testing a normative model on a sample of 449 Slovenian firms. The findings demonstrate that single business and vertical diversification make some difference in organizational growth and profitability in terms of their direct effects, but not indirectly with the mediation of corporate entrepreneurship strategy-making elements, which can be independently of diversification important for performance improvement.