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This paper reviews some of the main reasons found in the literature to explain the diversification decisions of firms and analyzes their relevance for firms located in emerging markets. This analysis is interesting because casual observation shows that large and diversified conglomerates still exist in developed economies and probably are the dominant type of enterprise in emerging markets. We conclude that two important reasons that may explain the existence of large diversified conglomerates in emerging markets are the creation and development of «internal capital markets» and the «market power» obtained through «multimarket contact». Because of their potential importance, these reasons are examined in depth in the paper.