Corporate Diversification and Risk: Portfolio Effects and Resource Redeployability

2022 ◽  
Author(s):  
Arkadiy V. Sakhartov
Keyword(s):  
Corporate Strategy ◽  
Formal Model ◽  
Portfolio Diversification ◽  
Economies Of Scope ◽  
Future Research ◽  
Corporate Diversification ◽  
Corporate Managers ◽  
Reduce Risk ◽  
Stock Market Investors ◽  
Corporate Risk

By analogy with portfolio diversification by stock market investors, managers and researchers have often expected that firms that spread operations across product or geographic markets reduce risk. However, numerous exploratory studies in corporate strategy and in international business have not been able to robustly confirm this expectation. This study develops a formal model to scrutinize implications of corporate diversification for corporate risk. The model incorporates the key distinction of corporate diversification, economies of scope, that qualifies the analogy between corporate and portfolio diversification. The presence of a particular type of economies of scope, resource redeployability, not only inherently increases risk but it can also raise risk over the level in undiversified firms. The model uses determinants of resource redeployability from previous research to derive conditions with which corporate diversification enhances risk. The developed elaborate operationalization of corporate risk should facilitate future research and help corporate managers.

scholarly journals Synergy of Top Management Team Demographics, Strategy and Structure: Empirical Evidence on Performance of Public Enterprises

2018 ◽  
Vol 13 (2) ◽  
pp. 108
Author(s):  
Zachary B. Awino ◽  
Bwire Joseph Francis
Keyword(s):  
Organizational Structure ◽  
Chief Executive Officers ◽  
Corporate Strategy ◽  
Theory Of The Firm ◽  
Chief Executive ◽  
Hierarchical Regression ◽  
Future Research ◽  
Cross Sectional ◽  
Corporate Strategies ◽  
Executive Officers

The study conceptualized the collective effect of TMT demographics, corporate strategy and organizational structure on performance of Kenyan PEs. TMT demographics have been posited to influence performance however; this position has been largely tautological and hence required more empirical testing. The study adopted a cross-sectional descriptive survey in which a semi-structured questionnaire was used to obtain data. The questionnaire was administered through a drop and pick method to a sample of 117 Chief Executive Officers. The study used both descriptive and inferential statistics for purposes of data analysis. Descriptive statistics used included mean, standard deviation, coefficients of variation (CVs) and t-tests. Inferential analysis involved the use of multivariate and hierarchical regression analyses. The findings of the study indicated that jointly TMT demographics, corporate strategy and organizational structure significantly influenced performance of PEs. The findings informed theories (upper echelon, configuration, institutional an behavioural theory of the firm) by showing their relevance and applicability in day-to-day organizational operation; decision makers at managerial level are guided on how to choose TMTs with the right mix of demographics, and policy makers on development of guidelines and policies that define the required TMT demographics during recruitment who can develop corporate strategies and adopt structures that bring about stellar performance. The limitations of this study pin-points some areas that need further research in the future. For instance, a qualitative research with variables such as culture and leadership could be considered for future research.

Do “rising stars” avoid risk?: status-based labels and decision making

2014 ◽  
Vol 35 (2) ◽  
pp. 121-136 ◽  
Author(s):  
Igor Kotlyar ◽  
Leonard Karakowsky ◽  
Mary Jo Ducharme ◽  
Janet A. Boekhorst
Keyword(s):  
Decision Making ◽  
Corporate Strategy ◽  
Business Students ◽  
Risk Tolerance ◽  
High Potential ◽  
Future Research ◽  
High Status ◽  
Negative Effects ◽  
Risky Decision ◽  
Content Type

Purpose – The purpose of this paper is to empirically examine how status-based labels, based on future capabilities, can impact people's risk tolerance in decision making. Design/methodology/approach – In this paper the authors developed and tested theoretical arguments using a set of three studies employing a scenario-based approach and a total of 449 undergraduate business students. Findings – The findings suggest that labeling people in terms of future capabilities can trigger perceptions of public scrutiny and influence their risk preferences. Specifically, the results reveal that individuals who are recipients of high-status labels tend to choose lower risk decision options compared to their peers. Research limitations/implications – The study employed scenarios to examine the issue of employee labeling. The extent to which these scenarios have truly captured the dynamics of labeling is questionable, and future research should employ a field-based study to examine whether the reported effect can be observed in a “real” work context. Practical implications – Organizations are concerned about their future leadership capacity and often attempt to grow leadership talent by identifying high-potential employees early on. The results of this study suggest that such practice may have an unintentional negative effect of reducing high-potentials’ tolerance toward risky decision making, thus potentially impacting these future leaders’ decision making in the realm of corporate strategy, R&D, etc. Originality/value – The issue of how labeling individuals in terms of future capabilities can impact their risk preference has been largely ignored by organizational research. This paper suggests that the popular practice of identifying high-potential employees may have unintentional negative effects by lowering their risk tolerance.

scholarly journals conceptual review of capital structure under risk-based capital regime, risk profile of insurer’s and performance

2021 ◽  
Vol 8 (1) ◽  
pp. 15-27
Author(s):  
Sarfaraz Ahmed Bhutto ◽  
Ikhtiar Ali Ghumro ◽  
Zulfiqar Ali Rajper ◽  
Saifullah Shaikh
Keyword(s):  
Capital Structure ◽  
Conceptual Framework ◽  
Risk Profile ◽  
Future Research ◽  
Risk Propensity ◽  
Holistic Understanding ◽  
Equity Ratio ◽  
Insurance Firms ◽  
And Performance ◽  
Corporate Risk

This paper evaluates capital structure under risk-based capital regime from the perspective of insurance firms and its performance. It also evaluates the moderating effect of insurer’s risk profile on capital-performance relationship. The authors aim to reveal ambiguities, gaps and omissions in the literature and to sketch avenues for future research. A conceptual framework for capital structure under risk-based capital era and its application is suggested focusing on equity, technical provision and required risk propensity for maximizing profit and wealth for all stakeholders. The research reviews that capital structure of insurers differs from non-insurance firms as such risk-based capital regulation must not only focus on the various types of risk but also recognized these differences. It is shown that insurers’ capital structure contains equity and technical provisions which comprises accruals and creditors, payable claims and insurance funds as an alternative of equity and financial debt as it is with conventional non insurance firms. This study thus stressed that for capital structure to best explain performance of insurers, it must be measured by equity ratio and technical provision ratio in place of debt ratio and corporate risk profile (quantitative and qualitative) must enter its sequence of performance relational analysis and effectiveness equations. We stressed further that only with the proposed conceptual framework would a holistic understanding of insurer’s capital structure be achieved while the observed contradictory and inconclusive empirical findings on capital structure and firm performance could be resolved.

Influences of Timeline and Perceived Strategy Effectiveness on Balanced Scorecard Performance Evaluation Judgments

2013 ◽  
Vol 26 (1) ◽  
pp. 165-184 ◽  
Author(s):  
Eric N. Johnson ◽  
Philip M. J. Reckers ◽  
Geoffrey D. Bartlett
Keyword(s):  
Performance Evaluation ◽  
Balanced Scorecard ◽  
Work Experience ◽  
Corporate Strategy ◽  
Data Availability ◽  
Future Research ◽  
Time Dimension ◽  
Strategic Performance ◽  
Performance Judgments ◽  
Financial Performance Measures

ABSTRACT This study examines evaluator ratings of subordinate performance in implementing a new corporate strategy in a Balanced Scorecard environment. We focus on two factors predicted to influence strategic performance judgments: (1) the presence or absence of an explicit timeline for strategy implementation, and (2) the evaluator's perceptions of the effectiveness of the new strategy. One hundred eleven M.B.A. students averaging over eight years of work experience participated in the study. Consistent with predictions, we find that (1) absence of an implementation timeline was associated with fixation on lagging financial performance measures outside of the subordinate's time span of control, and (2) evaluator perceptions of the strategy's effectiveness were positively associated with evaluations of strategy-congruent performance. These results extend prior research by highlighting the importance of the time dimension and perceptions of strategy effectiveness in performance judgments. Implications for future research in strategic performance evaluation are discussed. Data Availability: Contact the authors.

Challenges in Sharing Computer and Network Logs

2010 ◽  
pp. 2310-2325
Author(s):  
Adam Slagell ◽  
Kiran Lakkaraju
Keyword(s):  
Real World ◽  
Future Research ◽  
The Past ◽  
Trade Offs ◽  
Reduce Risk ◽  
Share Information ◽  
Made In

It is desirable for many reasons to share information, particularly computer and network logs. Researchers need it for experiments, incident responders need it for collaborative security, and educators need this data for real world examples. However, the sensitive nature of this information often prevents its sharing. Anonymization techniques have been developed in recent years that help reduce risk and navigate the trade-offs between privacy, security and the need to openly share information. This chapter looks at the progress made in this area of research over the past several years, identifies the major problems left to solve and sets a roadmap for future research.

Relationships between Information Security Concerns and National Cultural Dimensions

2011 ◽  
pp. 134-153
Author(s):  
Princely Ifinedo
Keyword(s):  
Information Security ◽  
Financial Services ◽  
Cultural Dimensions ◽  
Future Research ◽  
Financial Services Industry ◽  
Current Effort ◽  
Corporate Managers ◽  
Security Issues ◽  
Services Industry ◽  
Security Concerns

This study investigates the relationships between the contextual factor of national culture and information security concerns in the global financial services industry (GFSI). Essentially, this study attempts to expand the breath of information provided in the recent 2009 Deloitte Touche Tohmatsu (DTT) survey, which reported such issues in the financial services industry. The inference from the 2009 DTT survey was that information security concerns across GFSI are being informed solely by industry-related standards or imperatives. As such, perceptions and attitudes towards such issues were thought to remain unchanged in differing contexts. Results from this study’s analysis showed that the perceptions of information security concerns in GFSI compared reasonably well, but also varied by some national cultural attributes to debunk such a claim. Corporate managers in the industry may benefit from this research’s findings as they formulate country-wide information security policies and strategies. As well, insights from this current effort indicate that it would be erroneous for practitioners to accept that entities in the financial services hold exactly the same view on information security issues in their industry. Future research avenues are discussed.

Methodologies for Investment Evaluation

2001 ◽  
pp. 78-97 ◽  
Author(s):  
Egon Berghout ◽  
Theo-Jan Renkema
Keyword(s):  
Corporate Strategy ◽  
Problem Area ◽  
Future Research ◽  
It Investment ◽  
It Investments ◽  
Investment Evaluation ◽  
Body Of Knowledge ◽  
New Business ◽  
Extensive Body ◽  
Basic Approaches

The evaluation of information technology (IT) investments has been a recognised problem area for the last four decades, but has recently been fuelled by rising IT budgets, intangible benefits and considerable risks and gained renewed interest of both management and academics. IT investments already constitute a large and increasing portion of the capital expenditures of many organizations, and are bound to absorb a large part of future funding of new business initiatives. However, for virtually all firms, it is difficult to evaluate the business contribution of an IT investment to current operations or corporate strategy. Consequently, there is a great call for methods and techniques that can be of help in evaluating IT investments, preferably at the proposal and decision-making stages. The contribution of this chapter to the problem area is twofold. First, the different concepts, which are used in evaluation are discussed and more narrowly defined. When speaking about IT investments, concepts are used that originate from different disciplines. In many cases there is not much agreement on the precise meaning of the different concepts used. However, a common language is a prerequisite for the successful communication between the different organizational stakeholders in evaluation. In addition to this, the chapter reviews the current methods for IT investment evaluation and puts them into a frame of reference. All too often new methods and guidelines for investment evaluation are introduced, without building on the extensive body of knowledge that is already incorporated in the available methods. Four basic approaches are discerned: the financial approach, the multi-criteria approach, the ratio approach and the portfolio approach. These approaches are subsequently compared on a number of characteristics on the basis of methods that serve as examples for the different approaches. The chapter concludes with a review of key limitations of evaluations, suggestions on how to improve evaluation practice and recommendations for future research. This chapter draws on earlier work as published in Renkema and Berghout (1997), Berghout (1997), and Renkema (1996; 2000).

scholarly journals Antecedents to Digital Platform Usage in Industry 4.0 by Established Manufacturers

2019 ◽  
Vol 11 (4) ◽  
pp. 1121 ◽  
Author(s):  
Julian Marius Müller
Keyword(s):  
Industry 4.0 ◽  
Economies Of Scope ◽  
Future Research ◽  
Research Approach ◽  
Digital Platforms ◽  
Industrial Enterprises ◽  
Qualitative Empirical Research ◽  
Industrial Sectors ◽  
Industry Sectors ◽  
Industrial Context

Digital platforms are expected to have the potential for a multitude of purposes forindustrial enterprises, for instance when integrated within the concept of Industry 4.0. Despite itsrelevance for industrial value creation, little research on platforms in the industrial context hasbeen undertaken so far. Owing to the lack of research in this field, the paper aims to investigate thepotentials and challenges of digital platforms in order to generate an understanding of theantecedents to the use of digital platforms by established manufacturers. In thequalitative-exploratory study, the paper uses a qualitative empirical research approach, relying onin-depth expert interviews. The sample comprises interviews with managers of 102 German andAustrian industrial enterprises from several industrial sectors. All of the enterprises regarded havepractical experiences with digital platforms. The results show that the main potentials of digitalplatforms are reducing transaction costs, combining strengths of enterprises, and realizingeconomies of scale as well as economies of scope. Yet, digital platforms bring challenges, such as alack of trust, competitive thinking, high coordination efforts, and loss of confidential information.The paper further distinguishes between various industry sectors revealing interesting differences.Based on the results, the paper indicates possibilities for future research and provides corporatepractice with implications.

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