On the differing pattern of corporate diversification across economies

Conglomerates, that is, firms which have diversified into industries having little in common in terms of markets, technologies, or skills, occupy only a relatively minor position among large firms in the U.S., but they dominate many other economies, particularly the developing ones in Asia. This paper describes a model which helps explain this difference in the observed pattern of corporate diversification across economies.The author is grateful to Gamal Atallah, participants at the Indira Gandhi Institute of Development Research, participants at the Forty-Third International Atlantic Economic Conference, October 8–11, 1998, Boston, Massachusetts, and an anonymous referee for helpful comments and suggestions. The author is responsible for all errors and omissions.