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Diversification: A Strategic Option to Survival of Micro-Finance
Banks in Imo-State, Nigeria

Mrs( Nwaiwu Blessing N
*epartment of Business Edu+ation( ,l-an I.o.u /ederal 0ollege %f Edu+atio( %werri Imo State
n.enwaiwu12a3oo.+om

Iwue4e Mala+32 N
*epartment of Management( Imo State 5ni-ersit2( %werri( Imo State
iwue4emala+3212a3oo.+om

,+3iole Emmanuel ,2o4ie
*epartment of Management( Imo State 5ni-ersit2( %werri( Imo State
emma)mgt12a3oo.+om

03i.we 6odde2 03u.wudi
*epartment of Management( Imo State 5ni-ersit2( %werri( Imo State
+3i.was)god12a3oo.+om

Abstract
73is stud2 in-estigated if di-ersifi+ation +an pla2 a strategi+ role in t3e sur-i-al of mi+ro-finan+e 8an.s in
%werri( Imo State( Nigeria. 73e stud2 emplo2ed a sur-e2 approa+3 and used t3e 9uestionnaire as its ma:or
sour+e of data +olle+tion. In order to guide t3e stud2( two resear+3 9uestions and 32pot3eses w3i+3 are
+onsistent wit3 t3e o8:e+ti-es of t3e stud2 were raised. ,N%&, was t3e tool for data anal2sis( and from t3e
findings of t3e results( t3e resear+3ers +on+ludes t3at di-ersifi+ation +an en3an+e t3e finan+ial performan+e and
t3eir +ompetiti-eness t3ere82 en3an+e t3eir sur-i-a in t3e industr2.
e!"or#s: di-ersifi+ation( organi4ational sur-i-al( mi+ro-finan+e 8an.s( +ompetiti-eness

$% IN&'OD()&ION
73e world e+onom2 toda2 is graduall2 integrating into one as a result of rapid te+3nologi+al growt3 espe+iall2 in
t3e areas of information and +ommuni+ation te+3nolog2. 73is 3a-e 8ro.en down trade 8arriers a+ross t3e nations
and deepened +ompetition. Moreo-er( e+onomi+ +run+3 w3i+3 in most +ases affe+t t3e finan+ial s2stem led 82
t3e 8an.ing se+tor ma.es it imperati-e t3at 8an.s s3ould ensure t3at t3eir in-estment portfolio mi; is managed
in su+3 a strategi+ manner t3at non-8an.ing operations +an +ontri8ute meaningfull2 to t3e sur-i-al of t3e 8an.s.
%ne of t3e worst 3it in an2 8an.ing se+tor +risis is t3e mi+ro finan+e su8-se+tor. Mi+ro-finan+e 8an. w3i+3 is
+riti+al to t3e e+onomi+ growt3 of e-er2 nation must sear+3 for operational models t3at +an 3elp it sur-i-e in
times of industr2 +3allenges. 73is re9uires t3at mi+ro-finan+e 8an.s must formulate strategies to +reate profit
+enters outside its +on-entional 8an.ing operations. ,gain( in order to en3an+e t3eir +ompetiti-e +apa+ities(
mi+ro-finan+e 8an.s must attra+t and sustain +onfiden+e from t3eir -arious sta.e3olders or pu8li+s. 73is
enun+iates t3e need for di-ersifi+ation in mi+ro-finan+e 8an.s in Nigeria. In t3e -iew of ,.anwa et al 200'"( t3e
formulation of a strateg2 for di-ersifi+ation must 8egin wit3 an e;amination of t3e firm<s 8asi+ o8:e+ti-es( s.ills(
and resour+es and an appraisal of its< strategi+ design. 73e2 posits t3at t3e mo-ement into di-ersifi+ation usuall2
ne+essitates a +3ange in t3e +ompan2<s root strateg2 and a +omplete re+2+ling of t3e poli+2 ma.ing pro+ess.
In its meaning( =ao et al 2011" defined di-ersifi+ation strateg2 as a te+3ni9ue for t3e identifi+ation
and assessment of potential ris.s and +om8ine a di-erse arra2 of in-estments in a portfolio. 73e2 assert t3at t3e
:ustifi+ation is t3at flu+tuations in t3e -alue of single se+urit2 will 3a-e smaller negati-e impa+t as a part of a
di-ersified portfolio. In t3is wa2( di-ersifi+ation redu+es t3e o-erall ris. of t3e in-estments. 7o =ao et al 2011"(
t3ere are t3ree ma:or strategies to en3an+e t3e 9ualit2 of di-ersifi+ation. /irstl2( t3e portfolio ma2 +omprise of
-arious in-estment instruments su+3 as 8onds( +as3( and sto+.s( among ot3ers. Se+ondl2( one ma2 emplo2
-arious mutual fund strategies su+3 as in-estment in 8alan+ed and inde; funds. 73is approa+3 entails t3e +reation
of portfolio w3i+3 +omprises of instruments wit3 -ar2ing le-els of ris.. >osses in+urred 82 in-estments in some
areas will 8e +ompensated 82 profits gained in ot3er areas. 73irdl2( one ma2 di-ersif2 t3e industr2 t2pe and
geograp3i+ lo+ations of t3e se+urities. 73is approa+3 aims to lessen t3e impa+t of ris.s asso+iated wit3 t3e
possi8le de+line of parti+ular industries. Moreo-er( weat3er +onditions su+3 as regional floods( storms( and
floods ma2 +ause e;tensi-e damages on +ertain lo+all2 8ased industries. /urt3ermore( it is 8est to simultaneousl2
in-est in domesti+ and international se+urities. E-en if one +ountr2 is e;perien+ing e+onomi+ de+line( t3e o-erall
portfolio will in+lude ot3er +ountries of -ar2ing degrees of e+onomi+ growt3.

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In t3e -iew of *astidar 2009"( *i-ersifi+ation strateg2 +omprises of 3ori4ontal and -erti+al di-ersifi+ation. 73e
first t2pe o++urs w3en t3e in-estor 3olds se+urities in -arious +ompanies w3i+3 engage in a +ertain a+ti-it2 at t3e
same stage of t3e produ+tion pro+ess. &erti+al di-ersifi+ation refers to in-estment in +ompanies w3i+3 are
engaged in different p3ases of produ+tion? from raw materials to finis3ed produ+ts. In general( 3ori4ontal
di-ersifi+ation narrows t3e in-estment to +ompanies wit3in a single se+tor. &erti+al di-ersifi+ation in+reases t3e
s+ope of in-estment to t3e pur+3ases of sto+.s in different 8ran+3es. Moreo-er( 8roader di-ersifi+ation ma2
entail t3e pur+3ase of 8ot3( sto+.s and 8onds wit3in di-erse arra2 of se+tors.
>e-2 and Sarnat 19@0" sa2 t3at organi4ations will attempt to di-ersif2 into a wide range of
industries in order to lower t3eir li.eli3ood of failure. Aeston and Mansig3.a 19@1" indi+ated t3at firms
ma2 underta.e +orporate le-el di-ersifi+ation to defend against t3e possi8ilit2 of a deteriorating industr2
en-ironment. 73e2 suggest t3at organi4ations +an sur-i-e( or at least affe+t t3eir rate of de+line if t3e2 rea+t
+orre+tl2 to en-ironmental +3ange. !feffer and Salan+i. 19@#" and 73ompson 19'1" state t3at firms +an
8uffer against en-ironmental effe+ts t3roug3 di-ersifi+ation of t3e firm<s a+ti-ities or mar.ets. 73e
impli+ation is t3at more di-ersified firms s3ould 8e less in+lined to fail.

1.2 Statement of the Problem
73e +ontinued e;isten+e of e-er2 organi4ation among ot3er t3ings depends on t3e -arious alternati-es of re-enue
generation and finan+ial dis+ipline. A3ere t3ere is no Instituted S2stem of generating re-enue from di-erse
sour+es and finan+ial dis+ipline( finan+ial re+.lessness ma2 8e+ome t3e order of t3e da2 and t3is will definitel2
affe+t t3e finan+ial sur-i-al of t3e organi4ation negati-el2. ,gain( poor design and implementation of
di-ersifi+ation strategies are +ommonl2 asso+iated wit3 distress in t3e 8an.ing se+tor( w3i+3 3inder 8an.s from
meeting t3eir finan+ial responsi8ilities to t3eir -arious sta.e3olders.
In-estors onl2 in-est t3eir mone2 in -entures t3at are +lassified as profita8le t3erefore 3inders t3e
attra+tion of in-estor<s fund( as t3e poor finan+ial sur-i-al o++asioned 82 inade9uate finan+ial dis+ipline and
+ontrol erodes in-estor<s +onfiden+e. /ailures from t3e operations of su8sidiar2 firms of a di-ersified 8an. also
in+rease t3e operational +ost of t3e 8an.s( and t3is if not +ontrolled ma2 affe+t t3eir finan+ial sur-i-al. Moreo-er(
operational effi+ien+2 is t3e .e2 to impro-ed organi4ational sur-i-al. A3ere t3ere is no di-ersifi+ation strateg2(
operational effi+ien+2 ma2 8e+ome unattaina8le and t3is fa+tor influen+es t3e internal pro+ess sur-i-al of t3e
organi4ation negati-el2.
73e pro8lems identified a8o-e leads to +ustomer<s dissatisfa+tion and low patronage w3i+3 ma2 lead
to poor mar.et sur-i-al. 73e pro8lem of t3is stud2 t3erefore is to in-estigate 3ow di-ersifi+ation strategi+ option
to t3e +o sur-i-al of mi+ro-finan+e 8an.s in Nigeria.

1.3 Objectives of the Study
73e general purpose of t3is stud2 is to in-estigate t3e influen+e of di-ersifi+ation strategies on t3e +orporate
sur-i-al of Nigerian 8an.s. 73e following spe+ifi+ o8:e+ti-es will 8e e;amined.
1. E;amine t3e influen+e of di-ersifi+ation strategies on t3e finan+ial sur-i-al of Nigerian mi+ro-finan+e
8an..
2. E;amine t3e influen+e of di-ersifi+ation strategies on t3e +ompetiti-eness of Nigerian mi+ro-finan+e
8an.s.

1.4 Research Questions
73e following resear+3 9uestions are raised to ser-e as a guide to t3is stud2.
i. A3at are t3e influen+es of di-ersifi+ation strategies on t3e finan+ial sur-i-al of Nigerian mi+ro-finan+e
8an.sB
ii. A3at are t3e influen+es of di-ersifi+ation strategies on t3e +ompetiti-eness of Nigerian mi+ro-finan+e
8an.sB

1.5 Statement of y!otheses
73e following tentati-e assertions are made 82 t3e resear+3ers for t3is stud2.
*!pot+esis One
=
0
? *i-ersifi+ation strategies do not 3a-e an2 signifi+ant influen+e on t3e finan+ial sur-i-al of Nigerian
mi+ro-finan+e 8an.s.
=
1
? *i-ersifi+ation strategies 3a-e a signifi+ant influen+e on t3e finan+ial sur-i-al of Nigerian mi+ro-
finan+e 8an.s.
*!pot+esis &"o
=
0
? *i-ersifi+ation strategies do not 3a-e an2 signifi+ant influen+e on t3e +ompetiti-eness of Nigerian
mi+ro-finan+e 8an.s.
=
1
? *i-ersifi+ation strategies 3a-e a signifi+ant influen+e on t3e +ompetiti-eness of Nigerian mi+ro-finan+e
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11@
8an.s.

,I&-'A&('- '-.I-/.
2.1 "iversification Strate#ies "efined
*ifferent aut3orities 3a-e addu+ed di-erse meanings to t3e +on+ept of di-ersifi+ation as a strateg2 in 8usiness. In
t3e -iew >2on et al 2002" most often( di-ersifi+ation strategies are implemented to 8roaden +ompan2<s
a+ti-ities 82 in+reasing ser-i+es( mar.ets and produ+ts. 73e o8:e+ti-e of di-ersif2ing is to ena8le a firm to enter
ot3er 8usiness units t3at are di-ergent from pre-alent a+ti-ities. *i-ersifi+ation strateg2 in itself does not e;ist in
one single form. S+3wart4 and Caimen 2000" 8elie-e t3at di-ersifi+ation is w3en a firm operating in one
industr2 produ+es outputs w3i+3 are +lassified under anot3er se+tor. =op.ins and !itts 2000" per+ei-e
di-ersifi+ation as w3en 8road 8usiness operates simultaneousl2. ,++ording to =amilton and Boo4e 2001"(
di-ersified firms are t3ose t3at e;tend t3eir 8usiness 8ase in order to de+rease o-erall ris. and impro-e t3e
growt3 rate of t3e firm. In t3e opinion of >u;en8erg et al 200)"( *i-ersifi+ation strategies are used to e;pand
firmsD operations 82 adding mar.ets( produ+ts( ser-i+es( or stages of produ+tion to t3e e;isting 8usiness.
In its earl2 da2s( di-ersifi+ation +ame a8out eit3er 82 a++ident or pure intuition. Em8ar.ing a +onglomerate
di-ersifi+ation was a wa2 to de+rease t3e ris. in-ol-ed in t3e e;isting operations of t3e 8usiness Mueller( 19@@".
,s identified 82 Montgomer2 199)"( t3ere are t3ree primar2 reasons t3at result in a +ompan2<s +on+lusion to
di-ersif2. 73e first reason is t3e Mar.et E !ower 8elief w3i+3 assumes t3at as a firm 8e+omes +onglomerate( it
+an o8tain stronger position. 73e se+ond one is identified as t3e agen+2 attitude. 73is is w3en managers
implement di-ersifi+ation to uplift t3e status of t3e firm and pro-ide prote+tion to t3e finan+ial +onditions of t3e
firm in times of e+onomi+ tur8ulen+e. /inall2( t3e t3ird reason .nown as t3e resour+e -iew en+ourages
di-ersifi+ation w3en t3ere are e;+ess resour+es in t3e firm t3at +an 8e elsew3ere and 8e more produ+ti-e. 7o
Fian 2010" di-ersifi+ation strateg2 is a ris. management te+3ni9ue a +ompan2 uses t3at ma.es use of a wide
-ariet2 of in-estments wit3in t3e +ompan2. 73e under l2ing prin+iple 8e3ind t3is s2stem is t3at it asserts t3at
different .inds of in-estment on an a-erage will gi-e in 3ig3er returns and also +reate a lower ris. t3an an
indi-idual in-estment in a +ompan2. 73e main aim of di-ersifi+ation is to redu+e or minimi4e t3e ris. of t3e
+ompan2. *i-ersifi+ation tries to e-en out t3e random ris.s t3at a +ompan2 +an 3a-e and pro-ide wit3 a 8etter
wa2 to impro-e on in-estments( and neutrali4e t3e negati-e sur-i-al of in-estments in t3e future. It is a well-
.nown fa+t t3at maintaining a well-8alan+ed and di-ersified +ompan2 +an 3elp a +ompan2 in 2ielding +ost and
minimi4e t3e ris.s in-ol-ed. ,n in-estment in se+urities would 2ield far more profits for t3e +ompan2 8ut in a
limited time w3en +ompared to 8ig in-estments.
Qfinance dictionary (2011) asserts that diversification strategies deal with developing new areas for
growth or risk reduction as a wa2 to in+rease t3e -ariet2 of 8usiness( ser-i+e( or produ+t t2pes wit3in an
organi4ation. *i-ersifi+ation +an 8e a growt3 strateg2( ta.ing ad-antage of mar.et opportunities( or it ma2 8e
aimed at redu+ing Qfinance dictionary (2011) asserts that diversification strategies deal with developing new
areas for growth or risk reduction as a wa2 to in+rease t3e -ariet2 of 8usiness( ser-i+e( or produ+t t2pes wit3in
an organi4ation. *i-ersifi+ation +an 8e a growt3 strateg2( ta.ing ad-antage of mar.et opportunities( or it ma2 8e
aimed at redu+ing ris. 82 spreading interests o-er different areas. It +an 8e a+3ie-ed t3roug3 a+9uisition or
t3roug3 internal resear+3 and de-elopment( and it +an in-ol-e managing two( a few( or man2 different areas of
interest. *i-ersifi+ation +an also 8e a +orporate strateg2 of in-estment in a+9uisitions wit3in a 8road portfolio
range 82 a large 3olding +ompan2. %ne distin+t t2pe is 3ori4ontal di-ersifi+ation( w3i+3 in-ol-es e;pansion into
a similar produ+t area( for e;ample( a domesti+ furniture manufa+turer produ+ing offi+e furniture. ,not3er is
-erti+al di-ersifi+ation( in w3i+3 a +ompan2 mo-es into a different le-el of t3e suppl2 +3ain( for e;ample( a
manufa+turing +ompan2 8e+oming a retailer.
73e term Gsur-i-alH 3as man2 +onnotations -- 8ot3 su8:e+ti-e and o8:e+ti-e. 73e most o8:e+ti-e wa2
to measure sur-i-al in organi4ations is to o8ser-e t3eir +ontinuing e;isten+e. 73is is pro8lemati+ gi-en t3e nature
of mergers and a+9uisitions( *ela+roi;( and 6lenn 19#$". , wa2 of +larif2ing t3e matter is to emplo2 a resour+e
dependen+e approa+3 !feffer and Jerr2 19@#". ,n organi4ation sur-i-es as long as it Ga+9uires inputs from
suppliers and pro-ides outputs to a gi-en pu8li+ +ustomers( +lients( patients( et+.". ,++ording to ,ltman 19'#"(
organi4ation fails w3en +oalitions of resour+e pro-iders +annot 8e indu+ed to suppl2 resour+es and t3e firm
+annot repa2 resour+e pro-iders for past support S3ep3ard 19#9". 73ere is general agreement among t3e
sta.e3olders t3at t3e firm 3as failed on+e it 3as entered 8an.rupt+2 pro+eedings Moulton 19##". In ot3er words(
t3e firm 3as failed to return in-estors< and +reditors< +apital in t3e agreed to manner( to pro-ide wor.ers wit3 :o8
se+urit2( to pro-ide +ities wit3 ta; re-enues( et+. /or t3e purpose of t3is stud2 t3erefore( sur-i-al is simpl2 a8ilit2
of t3e mi+ro-finan+e 8an.s to o-er+ome +ompetiti-e pressures and en-ironmental t3reats

2.2. "iversification Pers!ectives
,nsoff 195@" was t3e first to arti+ulate on di-ersifi+ation strateg2. =e proposed t3at di-ersifi+ation refers to new
produ+t de-elopment or new mar.et entr2. E-er sin+e( di-ersifi+ation is asso+iated wit3 entering a new industr2
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or field Iumelt( 19#2". In t3e -iew of Montgomer2 199)" di-ersifi+ation strateg2 is +ompre3ended from t3ree
different 8ut -ital perspe+ti-es? 73e mar.et-power( resour+e-8ased and agen+2 perspe+ti-es.
0%0%$ &+e Market-1o"er
73is -iew e;plains t3at organi4ations di-ersif2 in order to ma;imi4e profit and gain more mar.et power.
*i-ersified organi4ations alwa2s gain power o-er non-di-ersified firms as Montgomer2 199)" suggests. ,s
e;plained 82 Iumelt 19#2" mar.et power is t3e a8ilit2 of t3e firm to 3a-e 8ig impa+t at t3e industr2 and is a8le
to s3ape pri+ing and suppl2 of produ+ts.
0%0%0 'esource-base# 1erspective
73is implies t3at t3e main moti-ation for organi4ations to di-ersif2 is t3e resour+es Iumelt( 19#2". It is 8elie-ed
t3at organi4ations +an produ+e s2nerg2 82 following di-ersifi+ation. S2nerg2 is +reated 82 s3aring resour+es(
assets( +apa8ilities and +ompeten+ies w3i+3 will eit3er for+e operating +osts down or allow t3e firm to +3arge a
premium 8e+ause 82 utilising its resour+es it +an differentiate its offerings Montgomer2( 199)". ,lso( 03atter:ee
and Aernerfelt 1991" posit t3at t3e different resour+es s.ills owned 82 a firm determine t3e t2pe of mar.ets to
enter.
0%0%2 Agenc! 1erspective
73is -iew is lin.ed to t3e manager<s a8ilit2 to +ontrol a 8road range of a+ti-ities Montgomer2( 1991". In+reased
di-ersifi+ation( under t3e agen+2 -iew translates into fewer profits( t3erefore de+reased sur-i-al Iumelt( 19#2".
73e agen+2 -iews also propose t3at as firm ages( it will automati+all2 8e in-ol-ed in di-ersifi+ation w3i+3 is
w32 after a period of time( firm sur-i-al falls Mi+3el and S3a.ed( 19#)".It is said t3at as a firm 8e+omes older
in its industr2( it gains more +onfiden+e to a+9uire 8usinesses and 8e+omes more e;perien+ed to -erti+all2
integrate in its suppl2 +3ain. Ielating t3e t3ree -iews to organi4ational sur-i-al( t3e mar.et power perspe+ti-e
e;plains t3at di-ersifi+ation impro-es sur-i-al. 6rin2er et al 19#0" asserts t3at as firms grow into more
8usinesses t3e2 gain more power w3i+3 allows t3em to e;ert influen+e on t3e +ompetitors wit3in t3e industr2.
73e mar.et power -iew e;presses t3at if a firm .eeps operating in a single 8usiness( after some time it will
8e+ome unprofita8le Iumelt( 19#2". 73e agen+2 -iew( on t3e ot3er 3and( proposes t3at if di-ersifi+ation is
pursued to fulfill management desires and not to ma;imise profit( it will ultimatel2 8ring t3e sur-i-al le-els
down Montgomer2( 1991". /inall2 8ased on t3e argument of t3e resour+e 8ased -iew( Iumelt<s 19#2" resear+3
indi+ated t3at firms w3o were a8le to le-erage s.ills and resour+es among ot3er a+ti-ities were a8le to
demonstrate optimum sur-i-al results w3en +ompared 82 t3ose firms w3o were una8le to s3are an2t3ing
2.3 $y!es of "iversification Strate#ies
>iterature 3as identified two main streams of di-ersifi+ation( 0on+entri+ and 0onglomerate. =owe-er( as Na22ar
2002" stated( +on+entri+ di-ersifi+ation is more +ompli+ated as it 3as se-eral su8-+ategories wit3 it. 0on+entri+
di-ersifi+ation also .nown as related di-ersifi+ation o++urs w3en t3e produ+ts or mar.ets added to t3e +urrent
8usiness are related( s3are +ommon +apa8ilities and re9uire similar resour+es !alepu( 2005". 5nder related
di-ersifi+ation( t3e new 8usiness -entures 8enefit from s3ared resear+3 and de-elopment( resour+es( .nowledge
and t3e general 8rand de-elopment Mar.ides et al( 2011". Ielated di-ersifi+ation strategies are made up of
-erti+al integration strategiesJ 8a+.ward and forward and unrelated di-ersifi+ation is mainl2 +on+erned wit3
3ori4ontal integration.
0%2%$% .ertical Integration
73is is often t3e first +3oi+e for firms w3en +onsidering di-ersifi+ation. It in-ol-es t3e firm in-esting in its
suppl2 +3ain a+ti-ities eit3er 82 forward or 8a+.ward integration >ewellen( 1999". Ba+.ground integration is
+on+erned wit3 t3e a+ti-ities t3at a+t as inputs to t3e 8usiness. !alepu( 2005" posits t3at man2 large 8usinesses
a+9uire supplies of raw materials.
Specific .ertical Integration Strategies
73ere are se-eral -erti+al integration strategies for firms to follow. =owe-er( some +an pro-e to 8e diffi+ult to
administer 8e+ause t3e firm will 8e re9uired to assume t3e responsi8ilit2 for 8ot3 t3e upwards and downwards
ser-i+es t3at +ould 3a-e 8een ot3erwise pur+3ased elsew3ere %li-er( 199@".
,++ording to Bala.ris3nan and /o;( 199$"( t3ere are four t2pes of -erti+al integration strategies ea+3 8eing
suita8le for different +onditions. Ea+3 strateg2 represents a different le-el of internal in-estment and +apa8ilit2
transfer ,lso( ea+3 strateg2 is uni9ue in its ris. le-el( long term gains( desire for +ontrol( growt3 o8:e+ti-es. 73e
strategies in+lude full integration( tapered integration( 9uasi integration and +ontra+ts 03en( 199#". Ea+3
strateg2 is e;plained 8elow.
%ull &nte#ration
%li-er 200@"( is of t3e opinion t3at /ull2 integrated organi4ations pur+3ase or sell" t3eir produ+t or ser-i+e
needs internall2. 73e2 run t3eir fa+ilities to fulfill a su8stantial portion of t3eir input or output demands
internall2. /ull integration is implemented w3en?
%rgani4ations are +on-in+ed t3at t3e2 +an safeguard proprietar2 operations from +ompetiti-e infiltration
82 integrating.
0omponents and ma+3iner2 parts 3a-e to 8e engineered internall2 to smoot3 produ+tion pro+esses.
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Business desire for 9ualit2 +ontrol to in+rease wit3 e;+ellent super-ision at all le-els and stages of
produ+tion.
Integration allows t3e firm to a+3ie-e +ost ad-antage.
=owe-er( full integration will s3ow 8est results and wor.s well w3en?
Intense pri+e wars are not strong.
0apa+it2 e;pansions and in+reases are smoot3 wit3 sta8le demand.
73e organi4ation en:o2s a leading position and +ost ad-antages due to t3eir a8ilit2 to o8tain s+ar+e
resour+es.
73e te+3nolog2 used is e;tremel2 ad-an+ed and +ostl2 for ot3er to imitate.
$a!er &nte#ration
=ill and =os.isson 200@" are of t3e -iew t3at %rgani4ations in-ol-ed in taper integration depend on part of
t3eir re9uirements to 8e supplied 82 outsiders. ,s 6rant et al 19##" suggest t3at( in taper integration( a firm
ma2 produ+e a +ertain amount of t3eir re9uirements internall2 and t3e ot3er portions pur+3ased from ot3er
parties. 73e ad-antage of taper integration is t3at it allows t3e firm to ta.e t3e opportunit2 of total utilisation of
+apa+it2 wit3 ot3ers to a8sor8 t3e ris.s of e;+ess +apa+it2. =owe-er( taper integration allows firms to pa2
premiums for supplies +oming from ot3er parties w3i+3 as a result also de+reased t3eir 8argaining power. 7aper
integration +an 8e implemented w3en no p32si+al +onne+tion is needed( and is most suita8le w3en?-
Iaw materials are readil2 a-aila8le.
5nder-utili4ation of e9uipment and resour+es does not in+ur 3ig3 undesira8le dise+onomies. In ot3er
words( t3e 8enefits still outweig3 t3e +osts.
0onsidera8le -alue +an 8e added 82 supplies from outsiders w3o are +ostl2 to 8e produ+ed 82 t3e firm
internall2.

Quasi &nte#ration
%rgani4ations in-ol-ed in 9uasi integration do not own 100K of t3eir 8usiness units 8ut onl2 a portion of t3e
inputs or outputs. 73e 9uasi integrated units +an 8e in t3e form of fran+3ises( :oint -entures or mergers and t3e
manner in w3i+3 t3e2 are +ontrolled depends on t3e management and leaders3ip st2le %li-er( 199@". ,s Na22ar
199$" re+ommends( t3is strateg2 is useful w3en un+ertainties arising from new te+3nologies are e;tremel2 3ig3
and t3e +apital re9uirements are too +ostl2 for t3e firm to 3andle alone. 73e ad-antage of 9uasi integration o-er
taper integration is t3at it does not re9uire full owners3ip of di-ersifiers( 8ut at t3e same time 2ield similar
e+onomies of s+ale %li-er( 199@". =owe-er( t3e +osts of managing a 9uasi-integrated strateg2 is 3ig3er as
administrati-e issues are more +ompli+ated 8e+ause of man2 parties in-ol-ed in t3e owners3ip.

'ontractin#
73is strateg2 a++ording to M+*ougall and Iound 19#)"( does not re9uire an2 form of internal integration in t3e
firm. =owe-er( it re9uires detailed drafting of all responsi8ilities to 8e +arried out 82 ot3ers 8e+ause suppliers(
representati-es( manufa+turers( fa8ri+ators and w3olesalers will 8e performing t3e a+ti-ities t3at +ould 3a-e 8een
+ondu+ted in-3ouse( t3e firm must 3a-e superior .nowledge of 3ow t3e operations s3ould 8e e;e+uted.
0ontra+ting is most suited for a d2nami+ -olatile industr2 su+3 as +onstru+tion( as suggested 82 %li-er 199@".
=e suggests t3at for +ontra+ting to 8e su++essful in t3e long-term( t3e firms must possess 3ig3 8argaining power
to write t3e +onditions of t3e +ontra+ts.
*espite t3ese 8enefits( 03en 200#" opines t3at( in adopting -erti+al integration( +orporations must 8e
+autious t3at -erti+al integration does not limit t3eir fle;i8ilit2 as e;it +osts +an 8e 3ig3.
2.3.2. ori(ontal &nte#ration
!a8lo( 200)" 73is des+ri8es a+9uiring operations t3at a+t as +ompliments to +urrent a+ti-ities. 73e ris. in-ol-ed
in 3ori4ontal integration is far less t3an +an 8e seen in -erti+al integration 8e+ause t3e 8usinesses +an 8e more
+onglomerate or unrelated. 0onglomerate di-ersifi+ation are generall2 noted as unrelated di-ersifi+ation Iumelt(
19#2". 73is o++urs w3en one organi4ation di-ersifies into domains t3at are irrespe+ti-e of its a+tual 8usiness line.
,++ording to Me2er et al( 200$"( 73e main o8:e+ti-e of +onglomerate di-ersifi+ation is to in+rease t3e
profita8ilit2 of t3e organi4ation 82 a+9uiring ot3er 8usinesses. ,s Mis3ina et al 200)" impl2J t3e aims of
engaging in unrelated di-ersifi+ation are 8e+ause t3e +urrent opportunities in t3e 8usiness are restri+ted and to
in+rease t3e growt3 rate of t3e +ompan2. Most often( an in+rease in growt3 +an impl2 prestige and power ma.ing
t3e firm attra+ti-e to in-estors. =owe-er( !itts and =op.ins 19#2" state t3at t3ere are draw8a+.s to following
+onglomerate di-ersifi+ation. 73e prime disad-antage is t3e rise of administrati-e +osts and issues +onne+ted
wit3 3andling unrelated -entures. 0ompetition for resour+es is anot3er downside t3at +an +reate ri-alr2 wit3in
t3e firm Mar.ides et al( 199'".
2.4 )*+*%&$S ,+" 'OS$S O% "&-*RS&%&',$&O+
,s wit3 an2 8usiness pursuit t3ere are 8enefits and +osts a++ompan2ing di-ersifi+ation and e-entuall2( an
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organi4ations sur-i-al will 8e +ontingent on 3ow e;e+uti-es attain a 8alan+e 8etween 8enefits and +osts of ea+3

0%3%$ Benefits of Diversification
73e 8enefits of di-ersifi+ation are 8uilt around t3e following areas a++ording to Mis3ina et al( 200)".
1. *i-ersifi+ation +an re+o-er t3e firm from de8t +apa+it2 and impro-e t3e situation. B2 di-ersif2ing into
ot3er profita8le 8usinessesJ t3e in+reased earnings +an redu+e organi4ational de8t.
2. *i-ersifi+ation lessens t3e possi8ilit2 of going 8an.rupt 82 in-esting into different or newer industries.
$. *i-ersifi+ation +an en3an+e asset utili4ation and profita8ilit2.
). 0apital and >a8our produ+ti-it2 is in+reased due to di-ersifi+ation 8e+ause s.ills and e;pertise
de-eloped in one 8usiness field +an 8e transferred to anot3er.
5. In mar.ets w3ere ta;es e;ist( di-ersified organi4ations +an en:o2 transferring +apital from a surplus
di-ision to a defi+it di-ision una++ompanied 82 transa+tion +osts.
'. 5ns2stemati+ ris. is pooled in di-ersified enterprises. 73is is 8e+ause ea+3 -enture groups its ris.
toget3er and redu+es its impa+t on t3e ot3er 8usinesses.
@. &aria8ilit2 in +as3 flow earnings is minimi4ed.
#. Studies s3ow t3at s.illed emplo2ees alwa2s +3oose di-ersified firms 8e+ause t3e2 pro-ide in+reased :o8
se+urit2. ,lso studies indi+ate t3at emplo2ees en:o2 sta2ing in di-ersified organi4ations 8e+ause t3e2
get a 8etter +3an+e of :o8 rotation and t3erefore learn more.
9. *i-ersifi+ation aids firms in realising e+onomies of s+ale. B2 -erti+al integration assets( produ+ti-it2(
e9uipment and resour+es +an 8e utilised to a ma;imum. 73ese e+onomies of s+ope also lead to
a+3ie-ing s2nerg2.
10. *i-ersifi+ation allows a firm to ta.e ad-antage of t3e strategi+ gap t3at e;ists in +ompetiti-e
en-ironments.
11. *i-ersifi+ation is also +onsidered a route to es+ape from an undesira8le industr2.

0%3%0 )ost of Diversification
73ere are also +osts of di-ersifi+ation. 73e2 are as follows?
1. Managerial diffi+ult2 and +omple;it2 in +oordinating a+ti-ities of t3e 8usinesses.
2. Management does not 3a-e t3e re9uired s.ill and e;pertise to manage t3e ot3er 8usinesses
$. 73e assets of t3e ot3er a+9uired firms are in man2 instan+es under-alued. 73is demands in+reased effort
and e;+ellent management to e;ploit t3e opportunities t3at lie in t3ese under-alued assets
). &er2 3ig3 administrati-e +osts are in-ol-ed wit3 di-ersifi+ation
5. %rgani4ational +ulture differen+es +an result in pro8lems or =I issues t3at will re9uire time and effort
to sol-e.
'. In firms wit3 sto+. owners3ip( di-ersifi+ation does not +reate more -alue for s3are3older. S3are3olders
82 t3emsel-es +an own di-ersified portfolios and don<t need an organi4ation to +ondu+t t3is on t3eir
8e3alf
@. It is proposed 82 se-eral aut3ors t3at t3e si4e of an organi4ation and senior management +ompensation
is e;tremel2 related w3i+3 e;plains t3e reason w32 e;e+uti-es are in fa-our for di-ersifi+ation Su4u.i(
19#0". *i-ersifi+ation often presents rewards to e;e+uti-es t3at are not a-aila8le to s3are3olders( i.e.
di-ersifi+ation adds more -alue to e;e+uti-es t3at it does to in-estors. 73is issue 8rings a8out t3e ne;t
point.
#. *i-ersifi+ation influen+es t3e ris. of moral 3a4ard. Moral 3a4ard +an affe+t dire+tors or top
management in t3at t3e2 +3ange t3eir 8e3a-iour to a+t in t3e 8enefit of t3emsel-es so t3at t3e2 do not
loose t3e 8onuses asso+iated wit3 t3e di-ersifi+ation strateg2.

7o mitigate t3is +ost( top e;e+uti-es must 3a-e to 8alan+e t3e +ost and 8enefits of di-ersifi+ation to a+3ie-e t3e
goal of in+reasing organi4ational sur-i-al. 73ere is no dou8t t3at e-er2 strateg2( espe+iall2 radi+al s3ifts su+3 as
di-ersifi+ation 3as negati-e impa+ts on a firm( 8ut managers and all t3ose in-ol-ed 3a-e to wor. toget3er to .eep
t3e damaging effe+ts to t3e least possi8le le-el.

2.. /*$O"S O% &/P0*/*+$&+1 "&-*RS&%&',$&O+ S$R,$*12
7o =itt et al( 200@"( t3e met3od of pursuing a di-ersifi+ation strateg2 -ar2 depending on organi4ational goals. It
3as to 8e in+orporated from t3e initial strategi+ management pro+ess. 73e primar2 met3ods of strategi+
de-elopment in organi4ations are
a" Mergers an# Ac4uisition: Cale 2005"( asserts t3at t3e2 are t3e safest mode for pursuing
di-ersifi+ation as t3e2 e;pose least ris.. 7o Cale( it is -er2 +ommon for firms to merge toget3er and e-entuall2
3old s3ared de+ision ma.ing among t3e organi4ations. It is also e9uall2 +ommon for a+9uisitions among firms
w3ere in most +ases one firm would ta.e possession of t3e ot3er. =itt et al( 200@"( posits t3at( t3ere are se-eral
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121
in+enti-es for +3oosing mergers or a+9uisition. 73e 8usiness en-ironment is 3ig3l2 unsta8le and for new entrants
t3is +an 8e diffi+ult wit3out entering t3roug3 an a+9uisition. ,lso( in d2nami+ mar.ets ri-alr2 rea+tion +an 8e
-er2 intense a new entrants 7ee+e( 19#2". In a stud2 +ondu+ted 82 7allman and >i 200'"( firms t3at are willing
to di-ersif2 o-erseas to e;pli+it strategi+ +apa8ilities su+3 as resear+3 and de-elopment into new raw materials
depend on a+9uisitions. ,s mentioned earlier e+onomies of s+ale is one reason to di-ersif2. 73is di-ersifi+ation
to a+3ie-e +ost effi+ien+2 is 8est gained t3roug3 merging operations =itt et al( 200@". In 8usiness( it is a
long pro+ess to 8uild .nowledge or o8tain new +apa8ilities or s.ills. 73erefore( managers are moti-ated to
a+9uire ot3er firms for t3eir resear+3 and de-elopment s.ills or master2 in a spe+ifi+ mar.et or pro+ess . ,s said
8efore( managers are alwa2s prompted to di-ersif2 and it 3as 8een +on+luded 82 man2 studies t3at a+9uisition is
t3e fastest route to growt3 and it is definitel2 fa-oured o-er organi+ de-elopment &en.atraman and 6rant( 19#'J
=itt et al( 199@J 7ee+e( 19#2J >uffman and Ieed( 19#)". Ne-ert3eless( man2 firms s3ow support for
di-ersifi+ation t3roug3 a+9uisition 8e+ause it is a fast route to growt3( 8ut not alwa2s a su++essful strateg2.

5b6 Strategic alliances? ,++ording to 7ee+e( 200#"( alt3oug3 strategi+ allian+es are not +ommon on a
glo8al 8asis( t3e2 are pra+ti+ed more among 03inese firms. ,llian+es are w3en two or more enterprises
s3are resour+es( operations and a+ti-ities to a+3ie-e t3eir strategi+ goal Mar.ides( 1995". In strategi+
allian+es( goals of t3e firms do not ne+essaril2 3a-e to 8e similar %li-er( 199@". ,llian+es +an -ar2 in
t3eir degree of +omple;it2J t3e2 +an produ+e one produ+t or in man2 +ases multiple produ+ts.

73e moti-es for allian+es a++ording to 7ee+e et al( 199@" are?
1. =ig3l2 +ompetiti-e en-ironments in+reases t3e +omple;it2 of +ondu+ting 8usiness a+ti-ities w3i+3 in
return for+es firms to s3are resour+es or e9uipment to .eep up wit3 t3e +ompetition wit3out
in+reasing +ost or wasting time
2. Man2 8usiness -entures need spe+ial s.ills and inno-ation and t3is +an 8e readil2 o8taina8le
t3roug3 +olla8oration
$. /inan+e regulations in some +ountries e;ert pressure on foreign firms to wor. :ointl2 wit3 a lo+al firm
ot3erwise t3e2 mig3t ris. losing t3e pro:e+t
). 73e ne+essit2 to a+3ie-e +riti+al mass 82 forming +olla8orations wit3 firms t3at offer +omplementar2
produ+ts.
5. >earning and s3aring .nowledge to de-elop +ompeten+es from anot3er firm so t3at in t3e long term( t3e
learnt +ompeten+es +an 8e 8roug3t in 3ouse to t3e organi4ation and 8e used as a +ompetiti-e ad-antage.

2.3 "&-*RS&%&',$&O+ ,+" S4R-&-,0 R*0,$&O+S&P
73e issue on w3et3er and 3ow di-ersifi+ation affe+ts organi4ational sur-i-al 3as 8een e;tensi-el2 in-estigated in
empiri+al resear+3 for o-er )0 2ears. >iterature indi+ates t3at -aried t3eoreti+al perspe+ti-es and met3odologies
were proposed w3i+3 is t3e main reason w32 t3e out+omes are often in+onsistent. 03atter:ee and Aernerfelt
19##( 1991" suggest t3at t3e relations3ip 8etween related di-ersifi+ation and sur-i-al is positi-e. Berger et al
1995" support t3eir -iew 82 e;plaining furt3er t3at if related di-ersifi+ation is +ontinued o-er a period of
$ to 5 2ears( t3e sur-i-al le-els would sta8ili4e. In ot3er words( e-en if t3e related di-ersifi+ation was
dis+ontinued( t3e sur-i-al le-el would not dropJ instead it will sta2 t3e same for anot3er $ 2ears Mar.ides et al(
199'". 0al-o and Aellis4 19@#" assume t3at a firm 3as to 8e di-ersified into related 8usinesses for at least 5
2ears for it to see an impro-ement in its sur-i-al 9ualit2. 73e2 also urge firms t3at get engaged in related
di-ersifi+ation not to measure sur-i-al in finan+ial terms( 8ut instead use mar.et s3are or +ustomer satisfa+tion
measures 0al-o et al( 19@#". 73e reason for t3is 8eing finan+ial measures +an 8e misleading at t3e 8eginning
8e+ause a lot of in-estment will 8e re9uired w3i+3 will s3ow up negati-el2 on finan+ial statements.
!ali+3 et al 2000" affirm t3at related di-ersifi+ation is positi-el2 +onne+ted wit3 sur-i-al as long as
t3e re9uired resour+es and +apa8ilities are a-aila8le. Managers s3ould .now 3ow to operate t3e s2stems in
t3e re9uired firm and full2 understand wa2s to merge it wit3 t3e organi4ation in order to a+3ie-e s2nerg2 and
de-elop t3e learning +ur-e e-en furt3er. In addition to t3at( it is also mentioned t3at t3e firm 3as to +ontinuousl2
de-elop its organi4ational .nowledge( espe+iall2 wit3in industries. %rgani4ational .nowledge s3ould 8e gained
82 in a++umulating s.ill and e;perien+e t3roug3 s3aring a+ti-ities and routines a+ross all 8usiness lines. 6rin2er
et al 2010" impose t3at wit3out initiating organi4ational .nowledge( it will 8e diffi+ult to optimi4e t3e 8enefits
o8tained from related di-ersifi+ation on organi4ational sur-i-al. ,s firms e;pand and 8e+ome +omple;(
personnel need to s3are t3e e;pertise t3e2 3a-e a+9uired among ot3er departments. %rgani4ations are more
li.el2 to reali4e +ompetiti-e ad-antages t3roug3 a+ti-ities and produ+tion pro+esses. 73is is onl2 possi8le
t3roug3 ta+it .nowledge( i.e. pro+esses +an 8e a+3ie-ed more effi+ientl2 as time goes 82 8e+ause of
gaining e;perien+e. ,not3er +apa8ilit2 needed to en3an+e t3e di-ersifi+ation sur-i-al relations3ip is t3e a8ilit2
to operate in a -alue networ.. In t3e -iew of *u8ofs.2 et al 200@"( in organi4ation( it is +riti+all2 important to
+reate a -alue networ. and to +ome up wit3 an arrangement of inter organi4ational +onne+tions w3i+3 are
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important to produ+e produ+ts or ser-i+es. ,ll wor.ers s3ould understand t3e suppl2 +3ain wit3in t3e firms
operations and 8e s.illed at managing t3e w3ole pro+ess and lin.ages 8etween t3em in order to ensure t3at t3e
8est -alue is deli-ered to t3e 0lient.
, t3ird +apa8ilit2 re9uired to 8oost di-ersifi+ation sur-i-al lin.age is t3e identifi+ation of profit pools
and fo+using more on t3em 82 pro-iding ne+essar2 resour+es . !alepu( 2005" a-erred t3at !rofit pools are t3ose
parts of t3e organi4ation or a+9uired 8usiness di-isions t3at are more profita8le t3an ot3ers. E-en in
di-ersifi+ation( w3en a+9uiring a related 8usiness line( it is ne+essar2 t3at t3e new -enture is profita8le. , furt3er
area essential to support t3e affirmati-e relations3ip 8etween di-ersifi+ation and sur-i-al is 8en+3mar.ing. It<s
essential to measure sur-i-al against ot3er sur-i-al le-els to get an idea of t3e a+tual +orporate position.
Ben+3mar.ing also 3elps firms understand t3eir +apa8ilities w3en +ompared wit3 ot3er firms. 0omparing
sur-i-al to t3ose of 8est pra+ti+ing 3elps to +3ange t3e e;e+uti-e<s mindset in ma.ing t3em a++ept in+remental
impro-ements in +ompeten+es and resour+es w3i+3 e-entuall2 will 3a-e a fa-ora8le effe+t on sur-i-al.

2% M-&*ODO,O78
73e resear+3ers adopted a sur-e2 approa+3 in +arr2ing out t3is stud2. 73is approa+3 was +3osen to ena8le t3e
resear+3ers rea+3 out to a reasona8le num8er of t3e population wit3in t3e a-aila8le resour+es. 73is stud2 fo+used
on di-ersifi+ation strateg2 on +orporate sur-i-al wit3 mi+ro-finan+e 8an.s in %werri Muni+ipal 0oun+il( Imo
State Muni+ipal 0oun+il( Imo S tate Imo State as t3e stud2 firm. 73e population of interest in t3is stud2 +onsists
of all t3e staff of mi+ro-finan+e 8an.s in %werri Muni+ipal 0oun+il( Imo State( w3i+3 a++ording to t3eir
personnel nominal roll is gi-en as @2 staff. 73e data for t3e stud2 was sour+ed from staff ,ll wor.ers mi+ro-
finan+e 8an. and 03i.um mi+ro-finan+e 8an. %werri. , simple random sampling 82 8alloting was used to sele+t
t3e '0 staff mem8ers in t3e sample si4e. 73e 9uestionnaire titled? di-ersifi+ation and mi+ro-finan+e 8an. sur-i-al
*LM/BsS" was t3e ma:or sour+efor data +olle+tion

9% &est of *!pot+esis
*!pot+esis One
=o? 73ere is no positi-e relations3ip 8etween di-ersifi+ation and finan+ial sur-i-al of mi+ro-finan+e 8an.s.
=i? 73ere is a positi-e relations3ip 8etween di-ersifi+ation and finan+ial sur-i-al of mi+ro-finan+e 8an.s.
7o test t3is 32pot3esis( we use 9uestions s3owing responses on relations3ip 8etween di-ersifi+ation and sur-i-al
of mi+ro-finan+e 8an.s.
0ategor2 S, , 5N* * S* 7otal
Mar.eting 9 $ 1 2 1 1'
0ustomer Ser-i+es @ ) 1 1 1 1)
=uman Iesour+es 5 2 1 2 2 12
/und 7ransfer ) $ 1 1 1 10
0as3 L teller 2 $ 1 1 1 #
7otal 2@ 15 5 ' ' '0
!er+entage )5 25 # 10 10 100
Sour+e? field Sur-e2 201)"

73e responses refle+ting t3e >i.ert s+ale is s3own and tested using ,nal2sis of &arian+e ,N%&,".
SA A (ND D SD &otal
9;5M)5 $;)M12 1;$M$ 2;2M) 1;1M1
@;5M$5 );)M1' 1;$M$ 1;2M2 1;1M1
5;5M25 2;)M# 1;$M$ 2;2M) 2;1M2
);5M20 $;)M12 1;$M$ 1;2M2 1;1M1
2;5M10 $;)M12 1;$M$ 1;2M2 1;1M1
NO 1$5 '0 15 1) ' 2$0
O 2@ 12 $ 2.# 1.2 )'
EO
2
)$@5 @52 )5 )) # 522)
nM 0 ; r
A3ere( 0M t3e num8er of +olumns
rM t3e num8er of rows
n M 5;5 M 25
NO M 2$0
O M )'

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&ol.'( No.2$( 201)

12$
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6rand Mean M NO
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25 M 9.2
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25 M 522) E 211' M $10#
7ISS M 0O
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M 5 #91.2#" E 211' M ))5' E 211' M 2$)0

ESS M 7SS E 7ISS
M $10# E 2$)0 M @'#
7IMS M 7ISS M 2$)0
r-1 5-1
M 2$)0
) M 5#5
EMS M ESS M @'#
n-r 25-5
M @'#
20 M $#.) appro;imatel2 $#
/-+al+ulated -alue M 7IMS
EMS
M 5#5
$# M 15.$9
/-1 M 15.$9

ANO.A &AB,-
Source of variation SS DF MS F-cal
Between samples treatment" 2$)0 ) 5#5 15.$9
Ait3in samples @'# 20 $#
7otal $10# 2)
/rom t3e ta8le /--alue at 52 le-el of signifi+an+e wit3 r-1 and n-r degrees of freedom is? /
)
. 2).0.05 M 2.@#
2.@# 15.$9
*81O&*-SIS &/O
=o? *i-ersifi+ation does not en3an+e t3e +ompetiti-eness of mi+ro-finan+e 8an.s.
=i? *i-ersifi+ation en3an+es t3e +ompetiti-eness of mi+ro-finan+e 8an.s.
7o test t3is 32pot3esis( we use 9uestions on di-ersifi+ation and mi+ro-finan+e 8an.<s +ompetiti-eness.
0ategor2 S, , 5N* * S* 7otal
Mar.eting 9 ) 1 1 1 1'
0ustomer Ser-i+es ' 5 1 1 1 1)
=uman Iesour+es @ 1 2 1 1 12
/und 7ransfer 5 2 1 1 1 10
0as3 L teller ) 1 1 1 1 #
7otal $1 1$ ' 5 5 '0
!er+entage 51.@ 21.@ 10 #.$ #.$ 100
Sour+e? field Sur-e2 201)"


European Journal of Business and Management www.iiste.org
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&ol.'( No.2$( 201)

12)
73e responses refle+ting t3e >i.ert s+ale is s3own and tested using ,nal2sis of &arian+e ,N%&,".
SA A (ND D SD &otal
9;5M)5 );)M1' 1;$M$ 1;2M2 1;1M1
';5M$0 5;)M20 1;$M$ 1;2M2 1;1M1
@;5M$5 1;)M) 2;$M$ 2;2M) 2;1M2
5;5M25 2;)M# 1;$M$ 1;2M2 1;1M1
);5M10 1;)M) 1;$M$ 1;2M2 1;1M1
NO 155 52 1# 10 5 2)0M6
O $1 10.) $.' 2 1 )#
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2
51@5 @52 @2 20 5 '02)
nM 0 ; r
M 5 10#@.12" E $@20
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M $@20 E 1@1' M 200)
7IMS M 7ISS M 1@1'
r-1 5-1
M 1@1'
) M )29
EMS M ESS M 200)
n-r 25-5
M 200)
20 M 100.2
/-+al+ulated -alue M 7IMS
EMS
M )29
100.2 M ).2#
ANO.A &AB,-
Source of variation SS DF MS F-cal
Between samples treatment" 1@1' ) ).29 ).2#
Ait3in samples 200) 20 100.2
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)
. 2).0.05 M 2.@#

3% DIS)(SSION OF '-S(,&S )ON),(SION
73e results o8tained s3ows t3at di-ersifi+ation +an 8e e;plored as a strategi+ option for organi4ational sur-i-al.
73e resear+3ers are t3erefore of t3e opinion t3at mi+ro-finan+e s3ould di-ersif2 into less-ris.2 -entures w3ere
t3e2 3a-e +ompeten+ies. 73is will 3elp +omplement t3e re-enue t3e generate from +ore 8an. operations.

'-F-'-N)-S
,gle( B.( Mit+3ell( I.( and Sonnenfield( J. 1999". G,n In-estigation into Sto+.3older attri8utes and Salien+e(
0orporate Sur-i-al and 0E% -aluesH. Academy of Management Journal !2(") "0#$"2"%
,lug8uo 0.0. 2005"( A &ractical 'uide to &ro(ect )riting *werri Municipal +ouncil ,mo - tate Municipal
+ouncil ,mo - tateJ 0redo !u8li+ation.
,ltman( E.I 19'#". G/inan+ial Iatios( *is+riminant ,nal2sis and t3e !redi+tion of 0orporate Ban.rupt+2H(
Journal of .inance( &ol. 2$( No. )( pp. 5#9-'09.
,.anwa !.5( >em2 ,.( and 5.e:e S., 200'"( 0orporate !lanning and !oli+2 Strateg2. %werri Muni+ipal
0oun+il( Imo S tate Muni+ipal 0oun+il( Imo S tate? Iesour+e *e-elopment 0entre.
,l.3afa:i( ,. /.( Qoussef( M. ,. and Sardessia( I. 199#". G7FM( Strategi+ Management and Business !ro+ess
Ie-engineering? 73e future +3allengeH. ,nternational Journal of /echnology Management 10(!) (") (0)
21"$223%
,mit( I. >i-ant( J. 19##". G, 0on+ept of 0onglomerate *i-ersifi+ationH. Academy of Management Journal 23
"21$00!%
,nsoff( =.I. 195@". GStrategies for *i-ersifi+ationH. 4arvard 5usiness 6eview 1"(")7 111$12!%
Bala.ris3nan S.( /o;( I. 199$". G,sset Spe+ifi+it2( /irm =eterogeneit2 and 0apital Stru+tureH. -trategic
Management Journal 1!7 1$10%
Bass( /.M.( 0attin( !.J. and Ai=un.( *.I. 19@@". GMar.et Stru+ture and Industr2 Influen+e on !rofita8ilit2H.
Journal of Applied 8conomics 12(2) 101$120%
European Journal of Business and Management www.iiste.org
ISSN 2222-1905 !aper" ISSN 2222-2#$9 %nline"
&ol.'( No.2$( 201)

125
Berger( !.6.( %fe.( E. 1995". G*i-ersifi+ation<s Effe+t on /irm &alueH. Journal of .inancial 8conomics 1#(1)7
120"%
Berr2( M. 200)". GStrategies in t3e New E+onom2H. Journal of -trategic Management 1! 32$111%
Bowen( =.!. and Aiersema( M./. 2005". GMat+3ing Met3od to !aradigm in Strateg2 Iesear+3? >imitations of
0ross E Se+tional ,nal2sis and Some Met3odologi+al ,lternati-esH. -trategic Management Journal 20
02"$010%
Bowman( E.=. and =elfat 0.E. 2001". G*oes 0orporate Strateg2 MatterBH -trategic Management Journal 22(1)
1$1!%
Burgman( I.( and Ioos( 6. 200)". GMeasuring( Managing and *eli-ering &alue Sur-i-al in t3e !u8li+ Se+torH.
,nternational Journal of 9earning and ,ntellectual +apital 1(2) 112$1!2%
03a.rrti ,( Sing3 C( Ma3mood I 200@". *i-ersifi+ation and sur-i-al? E-iden+e from east-asian firms. Strategi+
Manage. J.( 2#? 101-120.
0al-o( 6.,.( Aellis4( S. 19@#". GSuper-ision( >oss of 0ontrol and t3e %ptimum Si4e of t3e /irmH. Journal of
&olitical 8conomy 30(")7 2!1$2"2%
0a-es( I.E. 19#1". G*i-ersifi+ation and Seller 0on+entration? E-iden+e from 03anges 19'$-@2H. /he 6eview of
8conomic and -tatistics 01 232$221%
03andler( ,.*. 19'2". Strateg2 and Stru+ture? +hapters in the 4istory of the American ,ndustrial 8nterprise%
M,/ &ress +am:ridge MA
03ang( Q. and 03oi( 5. 19##". GStrateg2( Stru+ture and Sur-i-al of Corean Business 6roups? , 7ransa+tions
0ost ,pproa+3H. Journal of ,ndustrial 8conomics 1# 1!1$1"3%
03atter:ee( S.( Aernerfelt( B. 19##". GIelated or 5nrelated *i-ersifi+ation? , Iesour+e-Based ,pproa+3H.
Academy of Management 5est &aper &roceedings #$11%
03atter:ee( S.( Aernerfelt( B. 1991". G73e >in. 8etween Iesour+es and 72pe of *i-ersifi+ation? 73eor2 and
E-iden+eH. -trategic Management Journal (12)17 11$!3%
03en( J.J. 199#". G73e +3ara+teristi+s and +urrent status of 03ina<s 0onstru+tion Industr2H. +onstruction
Management and 8conomics 10(0) #11$#12%
03ristensen( =. C. and 0. ,. Montgomer2 19#1". G0orporate E+onomi+ Sur-i-al? *i-ersifi+ation Strateg2 -s.
Mar.et Stru+tureH. -trategic Management Journal 2 1231 pp% 12#$1!1%
03ristensen( =. Montgomer2( 0. 19#1"( G0orporate E+onomi+ Sur-i-al? *i-ersifi+ation Strateg2 -s. Mar.et
Stru+ture(H -trategic Management Journal 2 122$1!1%
03ristensen( =.C. and 0.,. Montgomer2( 19#1". G0orporate E+onomi+ Sur-i-al? *i-ersifi+ation Strateg2
-ersus Mar.et Stru+ture(H -trategic Management Journal% 2 12#$1!#%
0is+el( *.= and E-ans( I.*. 19#)"( GIeturns to 0orporate *i-ersifi+ation in t3e 19@0sH. Managerial and
;ecision 8conomics "(2)
*astidar ! 2009". International +orporate di-ersifi+ation and sur-i-al? does firm self-sele+tion matter. J. Int. Bus.
Stud.( )0? @1-#5.
=ao S( *ong A and R3ongfeng S. 2011" *i-ersifi+ation and firm Sur-i-al in 03ina. ,fri+an Journal of
Business Management &ol. 52@"( pp. 10999-1100).
Fian 6( C3our2 7.,( !eng M.A( Fian R 2010". 73e Sur-i-al Impli+ations of Intra-and Inter- 6eograp3i+
*i-ersifi+ation. Strategi+ Manage. J.( $1? 101#-10$0.
Ii+3ard et al 2009"
S3aw 2009" 3ttp?SSwww.9finan+e.+omSdi+tionar2Sdi-ersifi+ation3ttp?SSwww.mi+ro-
finan+e8an.ing.+omSa8outusde.p3p
*atta( *.( Ia:agopalan( N.( Ias3eed ,. 1991". G*i-ersifi+ation and Sur-i-al? 0riti+al Ie-iew and /uture
*ire+tionsH. Journal of Management -tudies% 23(")7 "22$""3%
*a-is( M. !itts( S. 200)". GSur-i-al Measurement /ramewor.s IeengineeredH. Journal of -trategic Marketing
10(1) !1$"2%
*ess( 6. 6.( 6upta( ,.( =ennart( J. / and =ill( 0. A. 1995". G0ondu+ting and Integrating Strateg2 Iesear+3 at
t3e International( 0orporate and Business >e-els? Issues and *ire+tionsH. Journal of Management 21
1"#$121%
*u8ofs.2( !.( &aradara:an( !. 19#@". G*i-ersifi+ation and Measures of Sur-i-al? ,dditional Empiri+al
E-iden+eH. Academy of Management Journal 10(1)7 "2#$003%
E++les( I. 6. 1991". G73e Sur-i-al Measurement ManifestoH. 4arvard 5usiness 6eview 02(1) 111$11#%
/it4gerald( >.( Jo3nston( I.( Bringss( S. 1991". GSur-i-al Measurement in Manufa+turing IndustriesH. Academy
of Management -cience 1#(2) 30$112%
6assen3eimer( J.B. and Ceep( A.A. 1995". G73e Effe+t of *i-ersifi+ation on Manufa+turers( A3olesalers and
IetailersH. Journal of Management ,ssues # 11$20%
6eda:lo-i+( E.( S3apiro( *.M( and Buduru( B. 200$". G/inan+ial %wners3ip *i-ersifi+ation and /irm
!rofita8ilit2 in JapanH. Journal of Management and 'overnance # 11"$11"%
European Journal of Business and Management www.iiste.org
ISSN 2222-1905 !aper" ISSN 2222-2#$9 %nline"
&ol.'( No.2$( 201)

12'
6eiger( S. A. =offman( J. 199#". G73e impa+t of t3e Iegulator2 En-ironment and 0orporate >e-el
*i-ersifi+ation on /irm Sur-i-alH. Journal of Managerial ,ssues 10 !12$!"1%
6ort( M. 19'2". G*i-ersifi+ation and Integration Strateg2H. &rinceton <niversity &ress 2 11$20%
6rant( I.( Jammine( ,.( 73omas =. 19##". G*i-ersit2( *i-ersifi+ation and !rofita8ilit2 among Britis3
Manufa+turing 0ompanies 19@2-#)"H. Academy of Management Journal 117 ##1$301%
6rant( I.M. and Jammine( ,.!. 19##". GSur-i-al *ifferen+es 8etween t3e Arigle2 Iumelt Strategi+
0ategoriesH. -trategic Management Journals 2 111$1!0%
6rin2er( !.( Qassai-,rde.ani( M.( ,l-Ba44a4( S. 19#0". GStrateg2( Stru+ture( t3e En-ironment and /inan+ial
Sur-i-al in )# 5C 0ompaniesH. Academy of Management Journal 217 121$220%
=amilton( J. Boo4e( ,. 2001". GIe9uired Iesour+es for *i-ersified /irms in t3e *ut+3 0onstru+tion Industr2H.
Journal of -trategic Management 12(!) 121$!10%
=ill 0A>( =os.isson IE. 19#@". GStrateg2 and stru+ture in t3e multi produ+t firmH. Academy of Management
6eview 12(2)7 111$1!1%
=irs+3( S. and B. >e-. GSales sta8ili4ation t3roug3 e;port di-ersifi+ationH. /he 6eview of 8conomics and
-tatistics August (12#1) pp% 2"3$200%
=itt( M.( =os.isson( I.( Cim( =. 199@". GInternational *i-ersifi+ation? Effe+ts on Inno-ation and /irm Sur-i-al
in !rodu+t-*i-ersified /irmsH. Academy of Management Journal !07 #0#$23%
=op.ins( I. !itts( S. 2000". G*i-ersifi+ation Strategies in >arge 0onstru+tion /irmsH. Journal of 8conomics and
5usiness 12(3) 121$20"%
=os.isson( I.( =itt( M. 1990". G,nte+edents and Sur-i-al %ut+omes of *i-ersifi+ation? , Ie-iew and 0riti9ue
of 73eoreti+al !erspe+ti-esH. Journal of Management 10(2)7 !01$"02%
I7! 0onstru+tion( 2010"( a-aila8le at www.itp.net a++essed 01Mar+3 2010".
Ja+9uemin( ,.!.( Berr2( 0.=. 19@9". GEntrop2 Measure of *i-ersifi+ation and 0orporate 6rowt3H. Journal of
,ndustrial 8conomics (2#)!7 1"2$102%
Jo3n( 0. J. =arrison( 1999". GManufa+turing Based Ielatedness( S2nerg2 and 0oordinationH. -trategic
Management Journal 20 122$1!"%
Cale( S. 2005". G%rgani4ational Strateg2 and *e-elopment? New arenas for a+tionH. Journal of Management 13
20#$223%
Caplan( I. S.( and Norton( *. !. 1992". G73e Balan+ed S+ore+ard? Measures t3at *ri-e Sur-i-alH. 4arvard
5usiness 6eview #0(1) #1$#2%
Ca4an:ian IC( *ra4i I. 19#@". GImplementing internal di-ersifi+ation? +ontingen+2 fa+tors for organi4ational
design +3oi+esH. Academy of Management 6eview 12(2)71!2$1"!%
Ceats( B.A( 1990". G*i-ersifi+ation and Business E+onomi+ Sur-i-al Ie-isited? Issues of Measurement and
0ausalit2H. Journal of Management 10 01$#2%
Ceats( B.A. and =itt( M.,. 19##. G, 0ausal Model of >in.ages among En-ironmental *imensions( Ma+ro
%rgani4ational 03ara+teristi+s and Sur-i-alH. Academy of Management Journal 11 "#0$"23%
Ceegan( *. !.( Eiler( I. 6.( Jones( 0. I. 19#9". G,re 2our Sur-i-al Measures %8soleteBH Journal of
Management Accounting #0(12) !"$"0%
>emelin( ,. 19#2". GIelatedness in t3e !atterns of Industr2 *i-ersifi+ationH. 6eview of 8conomics and
-tatistics 12(!) 0!0$0"#%
>e-2( =. and Mars3all S19@0".G*i-ersifi+ation( !ortfolio ,nal2sis and t3e 5neas2 0ase for 0onglomerate
MergersH( Journal of .inance( Sept.(
>ewellen( A.6. 19@1". G, pure /inan+ial Iationale for 0onglomerate MergersH. Journal of .inance 207 "21$
"1#%
>ow( S.!. and Jiang( =. 200$". GInternationali4ation of 03inese 0onstru+tion EnterprisesH. A-+8 Journal of
+onstruction 8ngineering and Management 122(0) "32$"22%
>u8at.in( M.=.( 03atter:ee( S. 199)". GE;tending Modern !ortfolio 73eor2 into t3e *omain of 0orporate
*i-ersifi+ation? *oes it appl2BH Academy of Management Journal 1#7 102$110%
>uffman( 6.,.( Ieed( I. 19#)". /he -trategy and -urvival of 5ritish ,ndustry 12#0$1230 -t% Martin &ress =ew
>ork%
>uo( J. 2001". G,ssessing Management and Sur-i-al of Sino-foreign 0onstru+tion Joint &enturesH.
+onstruction Management and 8conomics 12(1) 102$1#%
>u;en8er( Stan. T*i-ersifi+ation Strateg2 Iaises *ou8ts.T =ational 6eal 8state ,nvestor /e8ruar2 200).
>2n+3( I. 0ross( >. 1991". GMeasure 5p(H Journal of -trategic Marketing 2!(1)20$112%
>2on( *.A( /errier( A.J 2002".GEn3an+ing Sur-i-al wit3 !rodu+t Mar.et Inno-ation? 73e Influen+e of 7op
Management 7eamH. Journal of Management ,ssues 1! !"2$!02%
Maisel( >.S. 1992". GSur-i-al Measurement? 73e Balan+ed S+ore+ard ,pproa+3H. Journal of +ost Management
"(2) !#$"2%
Mar.ides 00. 1995". G*i-ersifi+ation( Iestru+turing and E+onomi+ Sur-i-alH. -trategic Management Journal
European Journal of Business and Management www.iiste.org
ISSN 2222-1905 !aper" ISSN 2222-2#$9 %nline"
&ol.'( No.2$( 201)

12@
10(2)7 101$113%
Mar.ides( 0.0.( Ailliamson( !.J. 199'". G0orporate *i-ersifi+ation and %rgani4ational Stru+ture? , Iesour+e-
Based &iewH. Academy of Management Journal 12(2)7 1!0$10#%
Marlin( S. *an( A and S+ott( A. 200)". G*i-ersifi+ation Strateg2 and 7op Management 7eam /itH. Journal of
Managerial ,ssues 10 20$102%
M+*ougall( /. M. and *. C. Iound. G, +omparison of di-ersif2ing and non-di-ersif2ing ,ustralian industrial
firmsH. Academy of Management Journal 2# 123! pp% 13!$123%
Me2er CE( >ie8-*o+42 E. 200$". G!ost-a+9uisition restru+turing as e-olutionar2 pro+essH. Journal of
Management -tudies !0(2)7 !"2$!32%
Mi+3el( ,.( S3a.ed( I. 19#)". G*oes Business *i-ersifi+ation ,ffe+t Sur-i-alBH .inancial Management 11(!)7
13 2"%
Mis3ina Q( !ollo+. 76( !ora+ J/. 200)". G,re more resour+es alwa2s 8etter for growt3B Iesour+e sti+.iness in
mar.et and produ+t e;pansionH. -trategic Management Journal 2"(12)7 11#2$112#%
Montgomer2( 0. 199)". G0orporate *i-ersifi+ationH. Journal of 8conomic &erspectives 3 101$1#3%
Moulton( Ail8ur Norton 19##"-trategic and .inancial .actors in 5usiness .ailure 5ankruptcy and
6eorgani?ation( 5npu8lis3ed *o+toral *isser - tation( 5ni-ersit2 of Illinois at 5r8ana-03ampaign.
Mueller( *. 0( 19@@". G73e effe+ts of 0onglomerate Mergers? , sur-e2 of t3e Empiri+al E-iden+eH. Journal of
5anking and .inance 13 11"$1!#%
Na22ar !I. 1992". G%n t3e measurement of +orporate di-ersifi+ation strateg2? e-iden+e form large 5.S. ser-i+e
firmsH. -trategic Management Journal 11(1)7 212$21"%
Na22ar !I. 199$". GSur-i-al effe+ts of information as2mmetr2 and e+onomi+s of s+ope in di-ersified ser-i+e
firmsH. Academy of Management Journal 10(1)7 23$"#%
%li-a I. Sterman J*. 2001". G0utting +orners and wor.ing o-ertime? 9ualit2 erosion in t3e ser-i+e industr2H.
Management -cience !#(#)7 32!$21!%
%li-er 0. 199@". GSustaina8le 0ompetiti-e ,d-antage? 0om8ining Institutional and Iesour+e E Based &iewsH.
-trategic Management Journal 13(2) 02#$#11%
!a8lo ,>. 199)". G*eterminants of a+9uisition integration le-el? a de+ision-ma.ing perspe+ti-eH. Academy of
Management Journal 1#7 301$310%
!alepu( C. 19#5". G*i-ersifi+ation Strateg2. !rofit Sur-i-al and t3e Entrop2 MeasureH. -trategic Management
Journal 07 212$2""%
!ali+3( >.E.( 0ardinal( >.B.( Miller 0.0. 2000". G0ur-ilinearit2 in t3e *i-ersifi+ation-Sur-i-al >in.-age? ,n
E;amination of o-er 73ree *e+ades of Iesear+3H. -trategic Management Journal 217 1""$1#!%
!an4ar J0( Aillig I*. 19#1". GE+onomi+s of s+opeH. American 8conomic 6eview% #1(2)7 203$2#2%!itts( I.,.(
=op.ins( =.*. 19#2". G/irm *i-ersit2? 0on+eptuali4ation and MeasurementH. Academy of
Management 6eview #7 020$022%
!feffer( J.(and 6erald I. S 19@#". /he 8@ternal +ontrol of *rgani?ations A 6esource ;ependence &erspective(
New Qor.? =arper and Iow.
!orter( M.E. 19#@". G/rom 0ompetiti-e ,d-antage to 0orporate Strateg2H. 4arvard 5usiness 6eview 0"(1)7 !1$
"2%
!orter( M.E. and M+6a3an( ,.M. 199@". G=ow mu+3 does Industr2 Ieall2 MatterBH -trategic Management
Journal 13 1"$10%
!orter( M.E. and M+6a3an( ,.M. 200$". G73e Emergen+e and Sustaina8ilit2 of ,8normal !rofitsH. -trategic
*rgani?ation 1(1) #2$103%
!ra3alad( 0. C.( Bettis( I.,. 19#'". G73e *ominant >ogi+? , new >in.age 8etween *i-ersit2 and Sur-i-alH.
-trategic Management Journal #(0)7 !3"$"01%
Iamanu:am( &.( &aradara:an( !. 19#9". GIesear+3 on 0orporate *i-ersifi+ation? a S2nt3esisH. -trategic
Management Journal 10(0)7 "21$""1%
Ieed I( >uffman 6,. 19#'". G*i-ersifi+ation? t3e growing +onfusionH. -trategic Management Journal #(1)7
22$1"%
Ien( I. and C3ong( !. A. 200)". GMinimi4e Barriers to International 7rade? E- 8usiness in 0onstru+tion
Industr2H. &roceedings of !th ,nternational +onference on +onstruction &ro(ect Management
-ingapore !$" March !#"$#3"%
Iig82( *. 2001"( GManagement 7ools and 7e+3ni9ues? , sur-e2(H +alifornia Management 6eview !1(2) 112$
100%
Iumelt I. 19#2". G*i-ersifi+ation strateg2 and profita8ilit2H. -trategic Management Journal 1(!)7 1"2$102%
Iumelt( I. !. GStrateg2( Stru+ture and E+onomi+ Sur-i-alH. 4arvard <niversity &ress +am:ridge MA
(12#!)%Iumelt( I.!. 1991". G=ow mu+3 does Industr2 MatterBH Strategic Management Journal 12(2)
10#$13"%
Sastr2 ,. 199@". G!ro8lems and !arado;es in a Model of !un+tuated %rgani4ational 03angeH. Administrative
European Journal of Business and Management www.iiste.org
ISSN 2222-1905 !aper" ISSN 2222-2#$9 %nline"
&ol.'( No.2$( 201)

12#
-cience Quarterly !27 21#$2#"%
S+3malensee( I. 19#5". G*o Mar.ets *iffer Mu+3BH American 8conomic 6eview #" 1!1$1"1%
S+3warts( >. Caimen( I. 2000". G73eor2 of /irm Managerial Be3a-ior( ,gen+20osts and %wners3ip Stru+tureH.
Journal of .inancial 8conomics 12(2) !3$"2%
Set3( ,.( 73omas( =. 199)". G73eories of t3e /irm? Impli+ations for Strateg2 Iesear+3H. Journal of
Management -tudies 11 10"$121%
Se-ern( ,. C. and M. M. >auren+e( 19@)". G*ire+t In-estment Iesear+3 Intensit2 and !rofita8ilit2H. Journal of
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