Abstract

This article examines the relationship between diversification and performance in the UK defence industry. The theoretical arguments which have been advanced to support a general link between diversification and performance are examined together with an assessment of their applicability to the defence industry. This is followed by an empirical analysis of over seventy leading UK contractors. It is shown that there is no evidence to suggest that product diversification has had a positive impact on performance and some evidence of a negative impact. Geographical diversification, however, appears to be related to asset and sales growth.

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