Are EU Leading Firms Returning to Core Business? Evidence on Refocusing and Relatedness in a Period of Market Integration

Laura Rondi and Davide Vannoni

Review of Industrial Organization, 2005, vol. 27, issue 2, 125-145

Abstract: This paper tests, for 108 diversified EU manufacturing leaders faced by the EU integration shock (1987–1997), if firms responded to increased competitive pressure by readjusting their industry-mix around a core of related activities. Our results show that, in spite of limited reduction in diversification, firms pursued strategies of related constrained diversification by expanding the output of industries related to the core. We also find that complementarity amongst the firm’s operations – i.e., sharing common intermediary products or common output markets – drives the refocusing. The effect is stronger for highly diversified firms. Our findings suggest that EU leaders are moving toward a more efficient use of their resources. Copyright Springer 2005

Keywords: European integration; firm diversification; return to core (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (19)

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DOI: 10.1007/s11151-005-8322-y

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