Publication: Product-Market Competition and Resource Redeployment in Multi-Business Firms
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Date
2020-06-02
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Wiley
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Abstract
This article investigates how diversified firms reallocate internal non-scale free resources when one of their product business units (BUs) experiences increased exposure to international competition driven by a sharp decrease in trade tariffs. On average, firms tend to fight, by reallocating resources toward the BU affected by the trade shock and away from other BUs within the same firm. Two variables moderate this first-order effect with opposite signs. The level of sunk costs of the assets allocated to the BU affected by the shock is a positive moderator of resource reallocation to it. The presence of technological synergies between the BU affected and the rest of BUs instead moderates the relationship negatively. This negative moderation seems to only take place when competition increases the value of technology as a competitive resource.
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Attribution-NonCommercial-NoDerivatives 4.0 International
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IE Business School
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Morandi Stagni, R., Santaló, J., & Giarratana, M. S. (2020). Product‐market competition and resource redeployment in multi‐business firms. Strategic Management Journal, 41(10), 1799-1836. https://doi.org/10.1002/smj.3207.