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The value of flexibility in multi-business firms

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dc.contributor.authorSantaló, Juan
dc.contributor.authorFolta, Timothy
dc.contributor.authorGiarratana, Marco
dc.contributor.authorDickler, Teresa
dc.contributor.funderSpanish Ministry of Science and Innovation
dc.contributor.funderAgencia Estatal de Investigación
dc.contributor.rorhttps://ror.org/02jjdwm75
dc.date.accessioned2025-02-19T11:49:18Z
dc.date.available2025-02-19T11:49:18Z
dc.date.issued2022-05-29
dc.description.abstractWhether diversified firms have advantages over their single-business counterparts is the focus of much research in strategic management. Indeed, there is sparse evidence that corporate advantage exists, on average. We explore one potential driver of corporate advantage—that multi-business firms have more flexibility than single-business firms to cope with uncertainty, because they can internally redeploy resources across businesses. Using Compustat data, we show that uncertainty increases the relative advantage of multi-business firms, a finding robust to controls for endogeneity. Consequently, the paper provides important insight and evidence around when corporate advantage might obtain. Moreover, we find that growth option value is accentuated in the presence of switching flexibility. Finally, multi-business firms with redeployment experience and businesses with more inversely correlated returns benefit more from uncertainty.
dc.description.peerreviewedyes
dc.description.statusPublished
dc.formatapplication/pdf
dc.identifier.citationDickler, T. A., Folta, T. B., Giarratana, M. S., & Santalo, J. (2022). The value of flexibility in m ulti‐business firms. Strategic Management Journal, 43(12), 2602-2628. https://doi.org/10.1002/smj.3434
dc.identifier.doihttps://doi.org/10.1002/smj.3434
dc.identifier.issn1097-0266
dc.identifier.urihttps://hdl.handle.net/20.500.14417/3585
dc.issue.number12
dc.journal.titleStrategic Management Journal
dc.language.isoen
dc.page.final2666
dc.page.initial2445
dc.page.total27
dc.publisherWiley
dc.relation.departmentStrategy
dc.relation.entityIE University
dc.relation.projectIDPID2019-104568GB-100
dc.relation.projectIDPID2019-111422GB-I00
dc.relation.schoolIE Business School
dc.rightsAttribution-NonCommercial-NoDerivatives 4.0 International
dc.rights.accessRightsinfo:eu-repo/semantics/openAccess
dc.rights.urihttps://creativecommons.org/licenses/by-nc-nd/4.0/deed.en
dc.titleThe value of flexibility in multi-business firms
dc.typeinfo:eu-repo/semantics/article
dc.version.typeinfo:eu-repo/semantics/publishedVersion
dc.volume.number43
dspace.entity.typePublication
relation.isAuthorOfPublicationb15ba486-b637-4a5f-ae06-6a5e367ce510
relation.isAuthorOfPublicatione9508b29-b78b-4aa3-9560-d71aa11f6ee6
relation.isAuthorOfPublication466c4475-51f9-4ef7-a734-c7656203faf3
relation.isAuthorOfPublication.latestForDiscoveryb15ba486-b637-4a5f-ae06-6a5e367ce510
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