A METHODOLOGICAL NOTE ON DIVERSITY MEASUREMENT

This research addresses the question, do categorical and continuous me asures capture the same construct of diversity? Using analysis of vari ance, cluster analysis, and discriminant analysis, we investigated whe ther continuous measures (entropy and product count) differentiate bet ween diversification categories, whether continuous measures converted to categories and subjectively assigned categories classified compani es similarly, and whether continuous and categorical measures predicte d similar diversity-performance relationships. We concluded that the t echniques were associated but did not yield the same performance predi ctions. For researchers investigating diversity-performance relationsh ips, choice of measurement technique will influence research results. Our research results suggest that attempts to combine categorical and continuous techniques as a way to overcome the limitations of both met hods is not appropriate.