An Empirical Evaluation of the Equivalence of Categorical and Continuous Measures of Diversity
Document Type
Article
Publication Date
1-1-1994
Description
Researchers studying implications of various diversification strategies must choose among several different measures of diversity. This article reviews and empirically tests the equivalence of categorical and continuous measures of diversification strategy. Rumelt's (1974) categorical measure is compared to continuous measures used by Montgomery (1982) and the Jacquemin and Berry entropy measure (1979). The measures demonstrate a reasonable degree of correlation with one another. The Jacquemin and Berry entropy measure was found most effective in terms of being able to distinguish between related and unrelated diversification strategies. Implications are that continuous measures can capture the richness of Rumelt's classification scheme, although the choice of an appropriate measure should be based on the goals of the study.
Citation Information
Srivasta, Alok; Nargundkar, Satish; and Green, Ronald F.. 1994. An Empirical Evaluation of the Equivalence of Categorical and Continuous Measures of Diversity. Journal of Business Research. Vol.29(2). 145-149. https://doi.org/10.1016/0148-2963(94)90018-3 ISSN: 0148-2963