Resource Relatedness, Economies of Scope, and Corporate Structure

نویسنده

  • Arkadiy V. Sakhartov
چکیده

The idea that corporate structure should be carefully selected to match corporate strategy has been acknowledged since Chandler (1962). Scholars highlighted the degree of centralization of resource allocation decisions and the type of incentives used to motivate business unit managers as two important features of corporate structure. The development of the theory about the effect those features have on value realized with corporate diversification has generated some critical controversies. In particular, whether firms should be structured as centralized or decentralized to realize greater economies of scope from resource redeployment remained unclear. Similarly, whether all diversified firms should use collaborative or parochial incentives was not resolved. Finally, how the incremental benefits of the highlighted features of corporate structure bear upon relatedness was speculated rather than rigorously derived. To overcome those limitations, the present study develops a simulation model explicating the interdependences of economies of scope and corporate structure. The study appears to be the first to rigorously derive these interdependences. The results of the present study offer several stimulating insights for corporate diversification research.

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تاریخ انتشار 2015