Objective - This study examines the relationship between diversification strategy and company economic performance in the Moroccan real estate sector. The research focuses on measuring the impact of diversification on technical and Scale efficiency using the Data Envelopment Analysis (D.E.A.) method. The objective is to provide empirical evidence regarding the performance differences between diversified and undiversified companies in the Moroccan real estate industry context.

Methodology - Data was collected on sales, inventory, and personnel expenses to construct the input-output ratio from a sample of 60 companies in the Moroccan real estate sector. Diversified and undiversified firms were identified based on their business activities. The Data Envelopment Analysis (D.E.A.) method was then applied to measure these companies' technical and Scale efficiency.

Findings - The results reveal that diversified companies in the Moroccan real estate sector exhibit significantly higher economic efficiency, around 40% compared to 31% for undiversified firms. Moreover, diversified firms demonstrate superior pure technical efficiency with a score of 47%, while undiversified firms lag at 36%. However, the two groups have no significant difference in scale efficiency. These findings highlight the positive impact of diversification on overall efficiency and suggest the potential benefits of adopting diversified strategies in the real estate industry.

Novelty - This study contributes to the existing literature by exploring the relationship between diversification and performance in the particular context of the real estate industry in Morocco. The findings of this study have practical implications. Managers and policymakers can utilize the results to understand the potential benefits of diversification and consider incorporating this strategy into their business models.

Type of Paper - Empirical/ Review

Keywords: Economic performance, D.E.A., diversification, Morocco, real estate sector, technical and Scale efficiency, slack

JEL Classification: L10, R15, R30, M21

URI: http://gatrenterprise.com/GATRJournals/JBER/vol8.1_2.html

DOI: https://doi.org/10.35609/jber.2023.8.1(2)

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