The impact of diversification with and without commodity bundling on corporate performance: An empirical analysis in Korea telecommunication markets

This study quantitatively analyzes how the diversification strategies of firms in the information communication technology (ICT) industry affect their existing businesses. Moreover, this study proposes a corporate strategy by comparing the outcomes of diversification with and without a bundling strategy. We perform an empirical analysis of firms that have diversified from high-speed Internet and wire telecommunication services to Internet protocol television service. For our analysis, we use a mixed multiple discrete-continuous extreme value model that reflects product selection and usage, and market simulation is conducted to access the effect of diversification. The results show that related diversification positively impacts corporate performance and that the impact of related diversification with commodity bundling is greater than that of related diversification without commodity bundling. On the basis of the results, this study suggests corporate strategy for diversification.