The effect of corporate diversification on organizational performance

Abstract

This study investigated the effects of corporate diversification on organizational performance. Product, technological and geographical diversification were each researched independently as variables of corporate diversification. The research was conducted using both quantitative and qualitative approaches using cross sectional survey and case study as a research design. Stanbic Bank, Uganda, was used as a case study where a total of sixty respondents were handed questionnaires; these were sourced from various departments, for example, compliance, digital channels, and vehicle and asset financing. Data was also obtained from secondary sources like text books, journals, dissertations, and online articles. The data obtained from the field was analyzed using the Statistical Package for Social Scientists (SSPS version 16). The purpose of the study was to add to the existing knowledge on the relationship between corporate diversification and organizational performance, but more specifically to attempt to bridge the gap in knowledge regarding the effect of corporate diversification in less developed countries. The study found that introducing new products helped the organization capture new customers and increase its market share, improve its financial performance, acquire an edge over its competitors, and position it at the head of the banking sector in Uganda. It also revealed that introducing new technologies in its production process helped the organization reduce its cost of production, improve performance in terms of meeting set objectives, improve its competitiveness in the market place, and increase efficiency and effectiveness in production and service delivery. Findings in relation to technological diversification indicated that opening up business units in new locations helped the organization to capture more customers and increase its market share, and improve its financial performance. The study established a positive relationship between corporate diversification and organizational performance.