DIVERSIFIED enterprises' are of increasing economic significance in the U.K. manufacturing sector, both in terms of numbers and net output. For example, in I963 diversified manufacturing enterprises accounted for 70-74% of the net output of all enterprises employing IOO or more people in the manufacturing sector, although forming only 22 76% of all such enterprises. In I958 the corresponding numbers were 55'75% and I4.76%, respectively. It is surprising therefore that, apart from the pioneering work of Amey [i], little has been written on the economics of the diversified enterprise in the U.K. In section II of this study a general framework of analysis is developed for examining the diversified enterprise. The extent to which enterprises diversify into groups of industries which use a common technology is explored in section III. The next three sections examine the significance of product differentiation, research and development, industry growth and concentration in determining the extent of diversification. A brief summary and some conclusions form the final section. The analysis is based upon census data for I958 and I963 because the most recent census, I968, uses an industry classification scheme which is too broad to complete most of the analysis presented in this paper.2 The findings for both I958 and I963 were similar, so that only those for I963 are presented here.3