A Refinement of the Entropy Measure of Firm Diversification: Toward Definitional and Computational Accuracy

Sankaran P. Raghunathan

57 citations0/0 files storedJournal of Management

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Business Strategies and Innovation Innovation and Knowledge Management Firm Innovation and Growth

Abstract

The entropy measure of firm diversification is refined to improve its precision. The concept of diversification is defined and the measure is modified to reflect its dimensions—the extent of diversification across segments (distribution) and the number of segments in which a firm operates. The refined measure makes it possible to better understand equivalences among firms with different diversification profiles.

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2015Educational measurement.1975Strategy, structure, and economic performance 1985Diversification strategy, profit performance and the entropy measure 1979Entropy Measure of Diversification and Corporate Growth 1967Economics and Information Theory 1989Research on corporate diversification: A synthesis 1988DIVERSITY, DIVERSIFICATION, AND PROFITABILITY AMONG BRITISH MANUFACTURING COMPANIES 1972-84.1986Construct Measurement in Organizational Strategy Research: A Critique and Proposal

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