Getting beyond relatedness as a driver of corporate value

Arkadiy V. Sakhartov, Timothy B. Folta

Research output: Contribution to journalArticle

Abstract

Our paper scrutinizes how corporate value derives from redeployability of firms' resources to new product markets. We focus on the underexplored determinant of redeployability, inducements, defined as advantages in returns in new over existing markets. We assemble separate dimensions of inducements from research on corporate diversification and real options and consider inducements in their entirety. A simulation model casts redeployability as a real option to switch the use of resources across markets and explicates important interdependences among the dimensions of inducements. The model also demonstrates that inducements modify the effect of relatedness on corporate value. Our theoretical arguments amend existing theory and have important implications for corporate diversification research.

Original languageEnglish (US)
Pages (from-to)1939-1959
Number of pages21
JournalStrategic Management Journal
Volume36
Issue number13
DOIs
StatePublished - Dec 2015
Externally publishedYes

Keywords

  • corporate diversification
  • relatedness
  • resource redeployment
  • simulation
  • switching option

ASJC Scopus subject areas

  • Business and International Management
  • Strategy and Management

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