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CONSTRUING THE BUSINESS PORTFOLIO: A COGNITIVE MODEL OF DIVERSIFICATION[1]

Ari Ginsberg

Journal of Management Studies, 1989, vol. 26, issue 4, 417-438

Abstract: In investigating the concept of diversification and its link to performance, strategy researchers have tended to emphasize economic, technological, or market characteristics that distinguish or relate one business to another. However, by ignoring the mental maps corporate‐level managers use to understand and manage strategic variety among their firm's businesses, strategy research has failed to produce an overall theory that links diversification to performance. Although the literature has begun to reaffirm the importance of developing a cognitive concept of diversification, researchers have been frustrated by the paucity of methods that are suitable for operationalizing the subjective characteristics of managerial mental maps into quantitative and reproducible measures. In addressing this deficit, this article proposes the use of the Repertory Grid, a set of procedures that facilitates elicitation and quantification of top managers' mindsets towards the firm's mix of businesses. After outlining the theoretical and methodological foundations of the Repertory Grid, the paper defines indices of grid structure and content and demonstrates the utility of grid data for assessing diversification.

Date: 1989
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