Who survives a recession? Specialization against diversification in the digital publishing industry

Purpose The purpose of this paper is to study the empirical relationship between specialization, diversification and rate of survival in the digital publishing industry. The sample includes all publishing companies in Italy that produce electronic content and distribute it through internet platforms. Design/methodology/approach The first part of the paper discusses the pros and cons of specialization against diversification, and applies the related economic theories to the digital publishing industry. The empirical work regarding the factors that affect firm survival is reviewed. The second part is empirical and analyzes the diversification strategies of 2,838 Italian digital editors between 1995 and 2014, and the impact of diversification on the probability of survival. Findings On the whole, digital publishing companies that are also active in traditional print activities have been constantly declining. However, those who combine print and digital activities or operate other mass media businesses have a higher probability of surviving in the market. These findings hold controlling for firm size and market structure, before and after the economic crisis exploded in 2009, in different geographical areas and by different legal forms of publishing companies. Research limitations/implications As the industry often presents country-specific characteristics, the econometric analysis should also be integrated with case studies that highlight particular survival conditions. Practical implications The study provides mass media scholars as well as practitioners with detailed information on the digital publishing trends in the medium term. Originality/value This research is significant because, in the period under review, many digital native entrepreneurs with scarce experience entered the industry, targeted digital native consumers/readers and challenged traditional and established media conglomerates.