Publication Details
Abstract
This study examined corporate diversification and business performance of Nigerian service companies. The problem that the research addressed was the reluctance of service firms to expand into new products, services, new markets which are required in spreading risks, improve competition and promote long-term growth. As a consequence, the research had one major aim, four objectives, through which four research questions and four research hypotheses were asked and formulated respectively. The research used product diversification and geographic diversification as dimensions of corporate diversification, and financial and operational performance indicators as measures of business performance. A quantitative survey design was employed, and Spearman's Rank Order Correlation was utilized in examining data from 272 respondents drawn from a population of 853 employees of studied Nigerian service companies. The findings revealed significant positive relationships between diversification of products and financial and operating performance, that is, firms with diverse products tend to be more profitable and efficient. Similarly, geographic diversification was found to have a significant positive relationship with financial and operating performance, that is, firms operating across more than one area tend to have improved revenue collection and provision of services. The study concludes that diversification has the ability to enhance firm resilience, competitiveness, and long-term sustainability if carried out strategically. It recommends that Nigerian service firms should undertake balanced product and geographical diversification strategies that complement their core competencies and operating capacities in order to maximize financial returns and operational efficiency.