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Getting beyond relatedness as a driver of corporate value

  • 1.  Getting beyond relatedness as a driver of corporate value

    Posted 08-07-2020 07:33

    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.

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    Best regards,



    Arkadiy Sakhartov

    Gies College of Business

    University of Illinois at Urbana-Champaign

    E-mail: arkadiys@illinois.edu

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