How Does Diversification Strategy Differ among Different Types of Family Firms?

Research suggests that family firms diversify less than nonfamily firms do. However, once family firms decide to diversify, are they more likely to prefer related or unrelated diversification? The answer to this question remains unclear. Thus, the purpose of this paper is to examine whether family firms are more or less likely to engage in related diversification and what types of family firms prefer related diversification. Using insights drawn from the mixed gamble approach, this paper suggests that family firms would prefer related diversification more than nonfamily firms and family firms vary from one another in their choice of diversification strategy depending on the governance structure of the firm, specifically, its leadership structure and board composition. Contributions and implications of this study are also discussed. [ABSTRACT FROM AUTHOR]