Corporate Growth and Diversification

Corporate Growth and Diversification

Copyright Date: 1975
Pages: 198
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  • Book Info
    Corporate Growth and Diversification
    Book Description:

    As an increasing number of large corporations branch out into many fields of industry, public concern over the lateral extension of their power is aroused. Arguing that entry by large firms into concentrated industries may instead stimulate competition, Charles H. Berry analyzes the effect that such diversification has on corporate growth and on the structure and functioning of industrial markets.

    To identify a relationship between the growth of large corporations and the pattern of their diversifying activities, Professor Berry examines 460 of the largest U.S. industrial corporations. In tracing the effects of their entry into some 200 manufacturing industries, he develops new and striking evidence of the protected position of leading firms in concentrated industries, a position that can be effectively undermined by the diversification of more powerful corporations into these industries.

    Originally published in 1975.

    ThePrinceton Legacy Libraryuses the latest print-on-demand technology to again make available previously out-of-print books from the distinguished backlist of Princeton University Press. These paperback editions preserve the original texts of these important books while presenting them in durable paperback editions. The goal of the Princeton Legacy Library is to vastly increase access to the rich scholarly heritage found in the thousands of books published by Princeton University Press since its founding in 1905.

    eISBN: 978-1-4008-7296-1
    Subjects: Business

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Preface
    (pp. v-viii)
  3. Table of Contents
    (pp. ix-2)
  4. I Introduction
    (pp. 3-7)

    Recent decades have not been ones during which the issue of corporate bigness has stimulated much academic interest or attracted a great deal of popular political comment. The popular issue has been the behavior and the (needed) social responsibility of major firms, but not, in general, the legitimacy of their size.¹ It is not difficult to see why. As Leonard Weiss put it: “Firms that sell $200 million a year are not small. . . . Yet a policy of insisting that all firms be as ‘small’ as they (viz. Parke-Davis, Hershey, United Shoe Machinery, Sunbeam and McGraw-Hill) would mean...

  5. II Corporate Size: Concepts and Interpretation
    (pp. 8-31)

    Increasing corporate concentration of industry poses two problems, one of measurement, the other of interpretation. This chapter is directed to both. Its purpose is to provide a framework for the following chapters. With respect to measurement, even with allowance for substantial error, the data consistently point to relative growth by the largest domestic industrial firms during the past twenty-five years. With respect to the interpretation of that growth, the second section of this chapter illustrates and argues the essential role of market structure to the analysis of this pattern of corporate growth. The following chapter extends that analysis to the...

  6. III Inter-industry Aspects of Corporate Concentration
    (pp. 32-58)

    Chapter II emphasized the role of market structure, as opposed to corporate size, in assessing the structural imperfection of American industry. It does not, however, follow that recent change in the corporate concentration of industry has had no effect on the market power of leading firms within concentrated industries. It is only that any such effect is not obvious.¹ Indeed, the theme of this chapter, and the rationale for much of the following empirical analysis, is that increasing corporate concentration of the kind that occurred in the United States during the past twenty or twenty-five years could have led to...

  7. IV Corporate Growth, Entry, and Diversification
    (pp. 59-90)

    The evidence in Chapter III with respect to plant activity gives no key whatsoever to corporate activity. It suggests a good deal of inter-industry fluidity on the part of the plants of the Fortune corporations; it provides no evidence that this behavior is intra-firm, as opposed to inter-firm, as it must be if this inter-industry activity is a corporate rather than a plant phenomenon.

    This chapter develops measures of corporate entry and exit and of corporate diversification for these firms, and those measures are in turn related to the growth rates of firms during the 1960 to 1965 period.¹ The...

  8. V Diversification Within and Among 2-Digit Industry Groups
    (pp. 91-121)

    The regression results reported in Chapter IV suggest that it is entry or diversificationwithinestablished 2-digit industry groups that may be growth-related, not a broader or more conglomerate form of inter-industry activity on the part of these 460Fortunecorporations. But the entry and diversification variables employed in that analysis fail to identify fully those inter-industry shifts that are within as opposed to across 2-digit industry groups.

    For example, entry into a new 2-digit industry group necessarily involves entry to a new 4-digit industry. But itcouldresult in entry to several new 4-digit industries. Similarly, increased diversification at...

  9. VI Corporate Diversification and Market Structure
    (pp. 122-152)

    In this chapter, inter-industry data for theFortunecorporations are aggregated: entry and exit, at the 4-digit level, are defined as the total amount of entry and exit registered by theFortunecorporations taken as a whole. No attention is paid to the identity of any particular entering or exiting firm. The focus is entry or exit by large corporations as a group, where large corporations are defined as the Fortune 461—the 460Fortunecorporations of Chapters IV and V, plus the Hearst Corporation.

    Initially, 4-digit entry and exit by these firms are related to industry characteristics that would...

  10. VII Summary and Interpretation
    (pp. 153-172)

    One commonly held opinion is that an important component of relative growth by large corporations is increasing diversification by the most rapidly growing corporations.¹ A second is that this growth and diversification has generally worsened the structure of industrial markets.² These are the aspects of large-scale corporate growth to which this study is directed. It should be clear that it is not concerned with any political question of thesocialpower, influence, or behavior of corporate bigness. It is concerned with industrial diversification as a source of corporate growth and ofeconomicpower.

    In that context, it asks four questions....

  11. Index
    (pp. 173-184)
  12. Back Matter
    (pp. 185-185)