Discussion: View Thread

Colleagues,
In researching managerial incentives to diversify the firm, I've come
across a statement suggesting that corporate diversification may increase
managers' autonomy from capital markets, but I can't identify the source.
Can anyone help with reference(s) to such a discussion?
Best regards,
Steve

Stephen V. Horner, Ph. D.
Assistant Professor of Management
Department of Management and Marketing
Arkansas State University
P. O. Box 59
State University, AR 72467
870.680.8019
shorner@astate.edu

http://www.clt.astate.edu/shorner/

Hi Steven,
You may want to search google scholar for the following four terms:
diversification risk capital market. There is a lot of literature on
this topic.

Diversification lowers risk, and lower risk leads to lower volatility
for the stock in the capital market, and the lower volatility might make
managerial executives less susceptible to market pressures (and
therefore more autonomous).

Hope this helps a bit. Thanks.

regards,
Subrata Chakrabarty
PhD Candidate, Management Strategy,
Dept of Management, Mays Business School, Texas A&M Univ.


.
-----Original Message-----
From: Business Policy and Strategy List
[mailto:BPS-NET@AOMLISTS.pace.edu] On Behalf Of Stephen V Horner
Sent: Friday, March 21, 2008 11:34 AM
To: BPS-NET@AOMLISTS.pace.edu
Subject: Corporate diversification and managerial autonomy from capital
markets

Colleagues,
In researching managerial incentives to diversify the firm, I've come
across a statement suggesting that corporate diversification may
increase
managers' autonomy from capital markets, but I can't identify the
source.
Can anyone help with reference(s) to such a discussion?
Best regards,
Steve

Stephen V. Horner, Ph. D.
Assistant Professor of Management
Department of Management and Marketing
Arkansas State University
P. O. Box 59
State University, AR 72467
870.680.8019
shorner@astate.edu

http://www.clt.astate.edu/shorner/

This may be an oversimplification of what you're looking for, but the whole
notion of an internal capital market is that the firm can fund operations
from within instead of going to the external capital market. The archetypal
examples are the business holding groups (see the HBS case on House of Tata)
or Japanese keiretsus. Most strategic management texts should make mention
of this when they talk about unrelated diversification (see Hill & Jones for
an example). If you type "internal capital market" into scholar.google.com
you will get several well-cited articles on it.

-Melissa
-----Original Message-----
From: Business Policy and Strategy List
[mailto:BPS-NET@AOMLISTS.pace.edu] On Behalf Of Stephen V Horner
Sent: Friday, March 21, 2008 11:34 AM
To: BPS-NET@AOMLISTS.pace.edu
Subject: Corporate diversification and managerial autonomy from capital
markets

Colleagues,
In researching managerial incentives to diversify the firm, I've come
across a statement suggesting that corporate diversification may
increase
managers' autonomy from capital markets, but I can't identify the
source.
Can anyone help with reference(s) to such a discussion?
Best regards,
Steve

Stephen V. Horner, Ph. D.
Assistant Professor of Management
Department of Management and Marketing
Arkansas State University
P. O. Box 59
State University, AR 72467
870.680.8019
shorner@astate.edu

http://www.clt.astate.edu/shorner/

You may find these articles by Porter helpful.

(1992) Capital Choices: The Causes and Cures of Business Myopia
(1992) Capital Choices: Changing the Way America Invests in Industry
(1996) Capital Disadvantage: America's Failing Capital Investment System

Mehmet Tag



-----Original Message-----
From: Business Policy and Strategy List [mailto:BPS-NET@AOMLISTS.pace.edu]
On Behalf Of Stephen V Horner
Sent: Friday, March 21, 2008 6:34 PM
To: BPS-NET@AOMLISTS.pace.edu
Subject: Corporate diversification and managerial autonomy from capital
markets

Colleagues,
In researching managerial incentives to diversify the firm, I've come
across a statement suggesting that corporate diversification may increase
managers' autonomy from capital markets, but I can't identify the source.
Can anyone help with reference(s) to such a discussion?
Best regards,
Steve

Stephen V. Horner, Ph. D.
Assistant Professor of Management
Department of Management and Marketing
Arkansas State University
P. O. Box 59
State University, AR 72467
870.680.8019
shorner@astate.edu

http://www.clt.astate.edu/shorner/