Similarities in financial resource allocations across the lines of business of diversified firms may indicate corporate strategic consistency, which may lead to superior corporate performance. In support of this argument, the variance in R&D intensity across the lines of business of 96 diversified firms was found to be inversely related to industry-adjusted return on assets. However, no relationship was found for capital intensity. These results provide partial support for the usefulness of a resource-based approach to the study of diversification strategy.
|Journal||The Academy of Management Journal|