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

Fingerprint

Resources
Firm value
Synergy
Value effect
Option valuation
Real options
Uncertainty

Keywords

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

ASJC Scopus subject areas

  • Business and International Management
  • Strategy and Management

Cite this

Resource relatedness, redeployability, and firm value. / Sakhartov, Arkadiy V.; Folta, Timothy B.

In: Strategic Management Journal, Vol. 35, No. 12, 01.12.2014, p. 1781-1797.

Research output: Contribution to journalArticle

Sakhartov, Arkadiy V. ; Folta, Timothy B. / Resource relatedness, redeployability, and firm value. In: Strategic Management Journal. 2014 ; Vol. 35, No. 12. pp. 1781-1797.
@article{6b9fbc6b5a1d41efb328cb92f8c39ab3,
title = "Resource relatedness, redeployability, and firm value",
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.",
keywords = "corporate diversification, formal model, real options, relatedness, resource-based view",
author = "Sakhartov, {Arkadiy V.} and Folta, {Timothy B.}",
year = "2014",
month = "12",
day = "1",
doi = "10.1002/smj.2182",
language = "English (US)",
volume = "35",
pages = "1781--1797",
journal = "Strategic Management Journal",
issn = "0143-2095",
publisher = "John Wiley and Sons Ltd",
number = "12",

}

TY - JOUR

T1 - Resource relatedness, redeployability, and firm value

AU - Sakhartov, Arkadiy V.

AU - Folta, Timothy B.

PY - 2014/12/1

Y1 - 2014/12/1

N2 - 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.

AB - 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.

KW - corporate diversification

KW - formal model

KW - real options

KW - relatedness

KW - resource-based view

UR - http://www.scopus.com/inward/record.url?scp=84911988504&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=84911988504&partnerID=8YFLogxK

U2 - 10.1002/smj.2182

DO - 10.1002/smj.2182

M3 - Article

AN - SCOPUS:84911988504

VL - 35

SP - 1781

EP - 1797

JO - Strategic Management Journal

JF - Strategic Management Journal

SN - 0143-2095

IS - 12

ER -