Relatedness and coherence in technological and product diversification of the world’s largest firms

The present paper investigates relatedness and coherence with reference to both product and technological diversification. In particular, it is argued that: (i) relatedness can be disentangled into three dimensions: industry-, technologyand firm-specific; and that (ii) coherence refers to both product and technological diversification. We provide empirical support of our premises with a study of a large cross-firm panel of technological and economic activity for 248 large firms over the period 1977–1995. The results support the view that large firms’ diversification processes are characterised by product-based coherence at the beginning of the period considered, and by technology-based coherence more recently. © 2000 Elsevier Science B.V. All rights reserved. JEL classification: L2; O33