Resource Allocation as an Outcropping of Strategic Consistency: Performance Implications
TL;DR: Similarities in financial resource allocations across the lines of business of diversified firms may indicate corporate strategic consistency, which may lead to superior corporate performance as discussed by the authors. But, as discussed in Section 2.
Abstract: Similarities in financial resource allocations across the lines of business of diversified firms may indicate corporate strategic consistency, which may lead to superior corporate performance. In s...
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TL;DR: The authors examined relationships among the stakeholder attributes of power, legitimacy, urgency, and salience; CEO values; and corpo...Using unique data provided by the CEOs of 80 large U.S. firms,
Abstract: Using unique data provided by the CEOs of 80 large U.S. firms, the authors examined relationships among the stakeholder attributes of power, legitimacy, urgency, and salience; CEO values; and corpo...
1,754 citations
TL;DR: In this article, the authors examine the effect that shifts in strategic emphasis have on stock return and find that the stock market reacts favorably when a firm increases its emphasis on value appropriation relative to value creation, but this effect is moderated by firm and industry characteristics, in particular, financial performance, the past level of strategic emphasis of the firm, and the technological envi...
Abstract: Firms allocate their limited resources between two fundamental processes of creating value (i.e., innovating, producing, and delivering products to the market) and appropriating value (i.e., extracting profits in the marketplace). Although both value creation and value appropriation are required for achieving sustained competitive advantage, a firm has significant latitude in deciding the extent to which it emphasizes one over the other. What effect does strategic emphasis (i.e., emphasis on value creation versus value appropriation) have on firm’s financial performance? The authors address this issue by examining the effect that shifts in strategic emphasis have on stock return. They find that the stock market reacts favorably when a firm increases its emphasis on value appropriation relative to value creation. This effect, however, is moderated by firm and industry characteristics, in particular, financial performance, the past level of strategic emphasis of the firm, and the technological envi...
794 citations
TL;DR: In this article, the authors suggest that the existence of complementary resources is a necessary but insufficient condition to achieve synergy, and that the resources must be effectively integrated and managed to realize the synergy.
719 citations
Cites background or result from "Resource Allocation as an Outcroppi..."
...Harrison et al. / Journal of Management 27 (2001) 679–690...
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...The Harrison et al. (2000) model, combined with findings on resource complementarity, offer an explanation for the near-zero returns acquiring firms receive as well as the contradictory findings on relatedness (e....
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...We conclude from this analysis that Harrison et al.’s (1991) original findings have not only gained support over time, but that they suggest an important and valuable conclusion regarding access to and use of complementary resources....
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TL;DR: This article employed a meta-analysis based on 80 samples from 66 studies (n=54,249) and found evidence of a positive relationship among all three slack types (i.e., available, recoverable, and potential) and financial performance.
427 citations
TL;DR: In this paper, the authors examined the relationship among four types of employment (knowledge-based, job-based and contract-based) and firm performance and found that a greater use of knowledge-based employment and contract work is positively associated with firm performance.
298 citations
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TL;DR: In this article, two approaches to the measurement of firm diversification are compared: (1) continuous SIC-based product count measures and (2) categorical measures as popularized by Rumelt.
Abstract: Two approaches to the measurement of firm diversification are compared: (1) continuous SIC-based product count measures and (2) categorical measures as popularized by Rumelt. The measures are found...
344 citations
TL;DR: In this article, the authors examined the risk/return performance of related and unrelated diversified firms at the level of accounting data and found that although on the average related firms outperform unrelated firms, related diversification offers no guarantee of a favorable risk/ return performance.
Abstract: Based on a sample of 80 firms, this paper examines the risk/return performance of related and unrelated diversified firms at the level of accounting data. The results suggest that although on the average related diversified firms outperform unrelated diversified firms, related diversification offers no guarantee of a favorable risk/return performance. (Many low performers are related diversifiers.) In fact, different diversification strategies can result in similar risk/return performance. However, a favorable risk/return performance is extremely hard to achieve with unrelated diversification. The study identifies diversified firms that have managed to simultaneously reduced risks and increase returns. The results indicate that these firms differ from other firms on some managerially useful dimensions. The differences suggest clues to guide other diversified firms to improve their risk/return performance.
323 citations
TL;DR: In this paper, the authors examine the linkage between diversity and performance using a two-dimensional conceptualization of diversity in business enterprises and propose methods for measuring diversification in enterprises using a variety of metrics.
Abstract: The article discusses a study which examines the linkage between diversity and performance using a two-dimensional conceptualization of diversity in business enterprises. Methods for measuring dive...
272 citations
TL;DR: Results confirm that restructuring activity focused on firms at intermediate levels of diversification which have a mixture of related and unrelated business units, and suggest a partial substitution between diversification and R&D activity.
Abstract: In the 1980s a number of large corporations restructured their diversified businesses through divestitures. It is hypothesized that restructuring activity focused on firms at intermediate levels of diversification (e.g., related-linked) which have a mixture of related and unrelated business units. Results confirm this hypothesis which explains that such mixed corporate strategies create organizational and control inefficiencies in managing both related and unrelated types of business units. Restructured firms were also found to move towards two types of different internal capital markets (related and unrelated). Most restructuring firms moved toward lower levels of diversification (e.g., related-constrained), although some moved toward higher levels of diversification (e.g., unrelated business). Also, this study finds restructuring firms that changed their corporate strategy by reducing diversified scope increased their R&D intensity. Firms that restructured and increased their diversified scope decreased R&D intensity. This result suggested a partial substitution between diversification and R&D activity.
270 citations
Book•
13 Nov 1987
TL;DR: In this article, the authors present an organizational challenge of the third wave of the Third Wave of Japanese management worker participation in the Japanese labor market, focusing on the X-Efficiency of Japanese Management Worker Participation.
Abstract: Introduction Productivity and Organizational Behavior Organizational Capital and Economic Theory Organizational Capital and Economic Growth Worker Motivation: Toward Increased X-Efficiency Productivity Through Intrafirm Cooperation Working Smarter the Japanese Way: The X-Efficiency of Japanese Management Worker Participation: Paths to Higher Productivity and Well-Being Developing Organizational Comparative Advantage Via Industrial Policy The Organizational Challenge of the Third Wave Conclusion References Index
263 citations
"Resource Allocation as an Outcroppi..." refers background in this paper
...Barney classified firm resources into three types: physical (Williamson, 1975), human (Becker, 1964), and organizational (Tomer, 1987)....
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