Li, P. F. (2014). Horizontal versus vertical learning: Divergence and diversification of lead firms in the Hangji toothbrush cluster, China. Regional Studies, 48(7), 1227-1241.
Peng-Fei Li in this article majorly builds on the horizontal learning framework of cluster firms which have been undermined by the study of the vertical learning framework. The author is effective in pointing out the role of the horizontal structure. To effectively do this, the article uses the comparative toolkit that studies the interactive learning between producers and users in which competitor interaction exhibits distinct characteristics (Li, 2014). In this regard, the paper is useful in solving the contemporary puzzles of regional development which could be related to the duality of local versus global relationships, and the challenges of cluster-upgrading in global value chains. However, it fails in highlighting the role of vertical learning frameworks. It does a great job in providing the structure for sketching out the development of cluster approaches extending from social dimensions but fails to build on the relationships between vertical and horizontal dimensions. More study would need to be conducted in building on the strategic choices firms have from the perspective of vertical and horizontal interactions.
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Kim, J., Lee, C. Y., & Cho, Y. (2016). Technological diversification, core-technology competence, and firm growth. Research Policy, 45(1), 113-124.
This article is quite useful in exploring the relationship between technological diversification and firm growth and majorly builds on the factors influencing the said relationship. The report examines the lacuna by adopting the framework that highlights the potential conditioning role of technological competence in the field of core technology that is specific to a given firm (Kim, Lee, & Cho, 2016). In so doing, the authors decompose the overall diversification of technology into both related and unrelated ones to adequately examine the differential effects of the two types of technological diversification on firm growth. According to the article and its authors, the conditioning role of core-technology competence in the relationship between technological diversification and firm growth is primarily based on the dual purpose of core-technology competence (Kim, Lee, & Cho, 2016). The article, therefore, majorly builds on expertise in core domain knowledge, how this affects the relationship of technological diversification and firm growth, and is so doing highlights some of the areas that a firm could improve on to build on this competency to its competitive advantage using a unique Korean panel dataset. The paper, however, fails in effectively exploring the causes of technological diversification and its effect on firm performance. More research should be done on this specific area to highlight what factors contribute to technological diversification.
Raudszus, M., Schiereck, D., & Trillig, J. (2014). Does vertical diversification create superior value? Evidence from the construction industry. Review of Managerial Science, 8(3), 293-325.
While the first article emphasized the role of the horizontal learning framework of cluster firms, this article by Raudszus, Schiereck, and Trillig take the opposite direction by exploring the vertical diversification and its power to create superior value within the firm. To do so, the authors not only build on the previous proof of positive acquirer unusual yields for vertical frameworks, but they go the extra mile of adding new understanding into stock return risk. The strength of this paper lies in the fact that it builds on the proof on risk and previous proof on return-induced capital creation through vertical mergers and acquisition to show that related industrial diversification is predominant to unrelated industries (Raudszus, Schiereck, & Trillig, 2014). Diversification ultimately creates acquirer shareholder wealth and is quite effective by creating a model of three strains of perspective on shareholder value impact through diversification. The authors successfully point out that while diversification is perceived to be value-destroying, the fact is that this could not be the case when considering such facts as access to better capital markets which are vital for enhanced value of diversified firms. The article, however, fails in elaborating on the crucial factor of the endogeneity of diversification, and therefore leaves such important observation as the economies of the scope being achieved through diversification open for further scrutiny.
Andreou, P. C., Louca, C., & Petrou, A. P. (2016). Organizational learning and corporate diversification performance. Journal of Business Research, 69(9), 3270-3284.
In understanding the relationship between the organizational learning and corporate diversification performance, this article by Andreou, Louca and Petrou comes in handy for it investigates the role of organizational learning with empirical findings that suggest that corporate diversification plays the detrimental role of reducing the shareholder's wealth. Diversification performance, however, depends on repetitive and accumulative experiences which relate to a firm's prior diversification activity and its expertise in multiple business segments (Andreou, Louca, & Petrou, 2016). The authors use this argument to defend why in as much as the organizational diversification negatively influences the shareholders' returns most firms would still opt for it. And in so doing, the article points out to another critical factor to consider in dealing with organizational diversification; how to turn this weakness into one of the organizational strengths. It does so by observing that firms which engage in multi businesses diversifying once do not demonstrate value reduction as opposed to firms that diversify multiple times showing value creation (Andreou, Louca, & Petrou, 2016). In other words, the article is quite useful in pointing out the role of multiple diversifications to a firm, whether single or multi-business firms. While the findings of this article accurately point out that performance is conditional on the type of diversification, more study would need to be conducted into these modes of diversification to build on the factors that affect the patterns of firm diversification.
References
Andreou, P. C., Louca, C., & Petrou, A. P. (2016). Organizational learning and corporate diversification performance. Journal of Business Research, 69(9), 3270-3284.
Kim, J., Lee, C. Y., & Cho, Y. (2016). Technological diversification, core-technology competence, and firm growth. Research Policy, 45(1), 113-124.
Li, P. F. (2014). Horizontal versus vertical learning: Divergence and diversification of lead firms in the Hangji toothbrush cluster, China. Regional Studies, 48(7), 1227-1241.
Raudszus, M., Schiereck, D., & Trillig, J. (2014). Does vertical diversification create superior value? Evidence from the construction industry. Review of Managerial Science, 8(3), 293-325.
