A large body of business strategy literature examines the relationship between (pr- uct) diversification and firm performance. From a conceptual point of view, increasing levels of diversification should have positive effects on firm performance, particularly due to economies of scope and scale, market power influence, and risk reduction. At the same time, diversifiers have to cope with substantial negative effects associated with increasing complexity. Unsurprisingly, the results of extensive empirical analyses of diversification effects on performance are somewhat contradictory. Against...