Digital diversification

In this work, we integrate the traditional literature on corporate strategy with more recent literature on digital in business and strategy research, to examine new mechanisms and drivers offered by digital diversification. This chapter thus offers various contributions: First, we advance a definition and conceptualization of digital diversification and compare it to traditional (non-digital) diversification. In doing this, we explore how digital diversification changes the traditional cost-benefit drivers in traditional diversification, and how the relationship between relatedness and performance shifts from a classic inverted U-shape curve in traditional diversification to an S-shaped curve in digital diversification, which increasingly favors less related diversification. Second, we characterize digital diversification across two key dimensions: locus (i.e., supply-side vs demand-side); and type (i.e., product vs business model), which we investigate by pointing to opportunities for firm growth. Finally, we present a series of promising yet underdeveloped areas for future investigation, and we advance an agenda to foster our understanding of digital diversification for both research and practice.