Strategic assets and organizational rent

Article Abstract:

Asymmetry in the specific mix ofskills and assets controlled by individual firms leads to differences among firms in the discretionary decisions made by management regarding resource allocation. This asymmetry serves as the foundation for the creation of sustainable organizational rent in individual firms. This view can be derived from an examination of existing firm strategy literature that centers on the linkage between market-level strategic industry factors and firm-level strategic assets. By extending current research on strategy to encompass the development of organizational rent, a model of industry analysis can be constructed that reveals how imperfect managerial decisions affect resource allocation made in the context of intraorganizational conflicts, environmental complexity and high levels of uncertainty.

Research, Organizational behavior

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Diversification strategies, business cycles and economic performance

Article Abstract:

Corporate diversification strategies are analyzed for related and unrelated businesses. Diversification into related areas attempts to take advantage of operating synergies, while moves into unrelated areas focus on financial gain through increased leverage and cash flow stability. A new measuring technique is applied to a large sample of companies to assess empirically the costs and benefits of these two types of diversification strategies. Results confirm that diversification for purely financial purposes is tied to more stable cash flows, reduced operating risk, and higher leverage, but also to reduced profitability. Firms that diversify into related business areas tend to show higher profitability on average than non-diversified firms, but results are not always significant statistically.

Analysis, Planning, Business planning, Diversification in industry, Industrial diversification

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