Many economics and business policy researchers have examined the performance of diversified firms. The general conclusion from this previous research is that unrelated diversification has not led to improved firm performance. The researchers found that firms pursuing related diversification that is, diversification built on firms’ strengths in their basic activities were, on average, more profitable than firms diversifying into unrelated areas. Wernerfelt and Montgomery explain the performance differences by pointing out the increased efficiency firms realize from transferring competencies to widely varying markets. Unrelated diversification, on the other hand, may increase market-related risks, but it can achieve efficient capital management. But related diversification can lead to better corporate performance, when compared to unrelated diversification, by focusing on core organizational capabilities and by exploiting interrelationships among business lines, i.e., by sharing business resources. However, as mentioned earlier, the realization of economic benefits from related diversification is highly dependent on increased coordination and information processing across related businesses, i.e., whether or not the special technologies, production skills, industry knowledge, distribution channels, input sources, and research facilities of one business are easily transferable and usable by other business units.