Exposure to Diverse Environment Makes Birds & Companies More Versatile

Conglomerates in emerging markets diversify because their environment requires it
George ILIEV

(Hong Kong Island, autumn 2009)

Birds of the varying weather...do not exactly flock together. They just stand out with their more versatile songs. Recent research shows male songbirds that live in fluctuating weather conditions are more flexible singers, incorporating a wider range of tones in their tunes. The birds need this variation in their songs because when precipitation varies, the acoustics of the environment and of vegetation change significantly. Variability allows these birds to be heard farther.

The same rule applies in the corporate world. Companies from emerging markets, where market and macroeconomic conditions are more dynamic, are usually the most diverse and the most diversified. Conglomerates in Asia, Latin America and Turkey incorporate a whole spectrum of industries. Just think of the South Korean chaebols (Daewoo, Hyundai, etc.) which run businesses from ships to electronics to fertilisers. 

(Hong Kong Island, 2009)

Imagine what a splash (or a flop) Apple would make if it started selling rubber boots. It doesn't have to resort to such luxuries only because it operates in a stable environment. It is the "companies of the varying weather that diversify together".