Abstract
Our paper elaborates the effects of resource relatedness on value of a multibusiness firm. We emphasize that value results from interplay of benefits of synergy and redeployability. This view, considering how synergy and redeployability interact in determining value, extends prior separate considerations of the two benefits. We also diagnose that the value effect of resource relatedness is contingent on uncertainty and specify this contingent relationship. We use the real option valuation approach and formally evaluate the impacts of the two effects of relatedness. This explication enables us to demonstrate how redeployability contributes to value beyond synergy, and how they contribute in tandem. In this sense, we illuminate previously undiagnosed value in multibusiness firms. Beyond theoretical implications, our results have important empirical and managerial implications.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 1781-1797 |
| Number of pages | 17 |
| Journal | Strategic Management Journal |
| Volume | 35 |
| Issue number | 12 |
| DOIs | |
| State | Published - Dec 1 2014 |
| Externally published | Yes |
Keywords
- corporate diversification
- formal model
- real options
- relatedness
- resource-based view
ASJC Scopus subject areas
- Business and International Management
- Strategy and Management