The microdynamics of structural change: Patterns of merger and diversification activity among food manufacturers

Large food manufacturers grew rapidly between 1976 and 1982, both by increasing their share of food manufacturing and by expanding into services. Diversification into new industries accounted for more than half of that growth. Much of the new diversification was directed toward related industries, such as foodservice, other food manufacturing industries, or several agricultural sectors. Diversification is usually carried out through merger, and between 1977 and 1986 acquisitions and divestitures led to ownership changes at establishments employing over 40% of the food manufacturing employees of the 500 largest food firms. These conclusions are drawn from analysis of a highly detailed dataset based on individual establishment records.