What determines value of a multi-business firm? The response to this question is of great importance to managers, investors, and researchers. Previous explanations focused on relatedness between a firm's businesses, which enables the firm to transfer resources between them. This video offers a new response. Our study with Timothy B. Folta draws attention to another determinant–inducements, performance advantages of one business over another within the firm. When redeployment of a firm's resources between its businesses is how the corporate headquarters adds value, inducements are the primary driver of the value of a multi-business firm, whereas relatedness is only secondary.
If you want to know more about resource redeployment, please visit this channel, subscribe to it, and get updated about new videos posted.
Gies College of Business
University of Illinois at Urbana-Champaign
My LinkedIn Page
My Twitter Page