Resource relatedness, redeployability, and firm value

Arkadiy V. Sakhartov, Timothy B. Folta

Research output: Contribution to journalArticle

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 languageEnglish (US)
Pages (from-to)1781-1797
Number of pages17
JournalStrategic Management Journal
Volume35
Issue number12
DOIs
StatePublished - Dec 1 2014
Externally publishedYes

Keywords

  • corporate diversification
  • formal model
  • real options
  • relatedness
  • resource-based view

ASJC Scopus subject areas

  • Business and International Management
  • Strategy and Management

Fingerprint Dive into the research topics of 'Resource relatedness, redeployability, and firm value'. Together they form a unique fingerprint.

  • Cite this