A company's top managers need not have entrepreneurial capabilities for diversification to increase profitability.

Question

Quizplus · Accepted Answer

Diversification often involves exploring new markets, developing new products, or acquiring new businesses, all of which require entrepreneurial capabilities such as creativity, risk-taking, and innovation. Without such capabilities in top management, diversification strategies may not be executed effectively, leading to lower profitability. Thus, it is important for top managers to possess entrepreneurial capabilities or at least have access to them through appropriate channel such as hiring talented entrepreneurs.

A Company's Top Managers Need Not Have Entrepreneurial Capabilities for Diversification