Abstract: This paper challenges the misconception that high growths automatically enhance the survival of de novo entrants, and cautions managers of de novo new entrants against too aggressive a production increase over a short time frame. Instead of narrowing the gap in production scale with incumbents and galvanizing employees through ambitious target, aggressive expansions in production can subject new entrants to increased survival hazards should demand fall below expectations. Empirical evidence from the intra-European airline industry confirms the significant survival risk incurred by the biggest and most aggressive production expansions. Meanwhile, exploring and continuing production in monopoly markets are shown to significantly reduce the survival odds of de novo new entrants.

Abstract: Diversification of young, small firms has deserved little study. In particular, it has not been clarified by the literature whether the use of such strategy in early years makes any significant contribution to firm survival. We investigate the effect of first-time diversification and expansion by young firms on survival. We find that the decision of new firms to diversify for the first time significantly increases survival probability. We find that young firms expanding into the same industry by creating a new establishment are more likely to survive than those who do not (regardless of overall size). However, young firms diversifying into other industries have a significantly higher chance of survival than start-ups expanding into the same industry. These results suggest that diversification may be a life-saving strategy for start-ups.

Abstract: Diversification is a major strategic choice. As diversification strategies supported by strong organizational knowledge base are more likely to succeed, firms seeking diversification opportunities would search for new information to complement their existing expertise. However not all organizations are equipped with the same ability to process and to acquire external knowledge when considering diversification decisions. In this research, we focus on family business groups to examine the relationship between diversification and the internal network with a family business group. Using panel data of family business groups in Taiwan, the results of our analysis suggest that internal network within a firm affect its propensity to diversify. However, delegation and participation in public affairs are positively correlated with the degree of diversification.

Abstract: We examine the joint effect of product and international diversification on the performance of small and medium enterprises (SME) in Spain over the period 1993-2006. The evidence reveals the existence of a negative relationship between geographic expansion and profitability. In turn, the adoption of both product and international diversification is not associated with higher performance. These results suggest that although diversification may be a relevant strategy for small businesses, the distinctive particularities of the latter — e.g., limited resources, lack of previous experience in the adoption of new products and accessing new markets — might constrain this alternative for business growth. As a conclusion, Spanish SMEs should overcome their shortcomings before adopting diversification.