The study focuses on the effects of diversification strategy on the performance of Kenyan Commercial state-owned corporations. It critically looks at whether or not these corporations use diversification strategy and then goes ahead to examine the relationship between diversification strategy and performance of the same corporations. The main areas explored include theories of diversification, types of diversification and organizational performance. To achieve this objective a cross-sectional survey study was conducted on 14 Kenyan commercial state-owned corporations including Kenya Meat Commission, Kenya Power and Lighting Company, Postal Corporation of Kenya, National Bank of Kenya and Kenya Reinsurance Corporation among others. Structured questionnaires were administered in the 14 selected Kenyan Commercial state-owned corporations. A sample of five employees from each selected state-owned corporation was interviewed resulting to total of 70 respondents. However, only 44 respondents filled and returned their questionnaires. Data was collected and the responses coded into labeled categories and thoroughly analyzed. Since this was a descriptive study, the data obtained was analyzed using statistical tools. Frequency distribution tables, mean scores and standard deviation were used to determine the relationship between diversification strategy and organizational performance in the Kenyan commercial state-owned corporations. The information was presented by use of tables and charts. According to the study, most of the organizations had been operating for more than ten years while most of the employees had worked for the same organization for more than six years. This means that the data collected was factual and credible for the study. This study revealed that diversification strategy has a positive relationship with performance in the Kenyan commercial state-owned corporations.

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