Session 111

Portfolio Management: Diversification and Divestitures

Track F

Date: Monday, October 5, 2015

 

Time: 08:00 – 09:15

Paper

Room: Plaza Court 6


Session Chair:

  • Caterina Moschieri, IE Business School

Title: Influences of Social Performance Feedback and Top Team’s Equity Pay Dispersion on Corporate Diversification

Authors

  • Elizabeth Lim, Georgia State University

Abstract: Firm performance can be evaluated based on historical or social aspiration. Of the two referent-based measures, social performance feedback has been theoretically less studied. Extending performance feedback theory and social comparison theory this study advances the theoretical development of two distinct types of social comparisons concerning performance across firms and pay dispersion across top managers, and their influences on corporate diversification. We propose that negative social performance feedback leads to more diversification whereas positive social feedback results in less diversification. We also suggest that the interactions of social performance feedback and dispersed TMT unexercisable options, restricted stock, and exercisable options impact the firm’s diversification level. The empirical results largely support the hypotheses.

Title: Multiple Recipes for Success: A Configurational Examination of Business Portfolio Restructurings

Authors

  • Peter Hildebrandt, University of Göttingen
  • Jana Oehmichen, University of Goettingen
  • Ulrich Pidun, Boston Consulting Group
  • Michael Wolff, University of Goettingen

Abstract: Our explorative empirical study investigates which sets of portfolio restructuring design characteristics, contingent on individual firm posture and industry environment, lead to successful business portfolio transformations. We draw on recent insights from related literature and the most salient indicators from prior restructuring research to develop a more comprehensive theory building contingency model for transformation success. Mixed findings in extant literature regarding success determinants in combination with the causal complexity of this topic strongly suggest a configurational way of examining portfolio restructuring. Thus, we employ a set-theoretic approach based on fsQCA, an effective method to explore complex alternative paths leading to a desired outcome. Our contingency model will aid theory building, provide practical guidelines for managers and advance research methodology via its set-theoretic perspective.

Title: Service Line Diversification, Organizational Heterogeneity, and the Performance of Professional Partnerships

Authors

  • Monika Schommer, University of Liverpool
  • Amit Karna, Indian Institute of Management Ahmedabad
  • Ansgar Richter, University of Surrey

Abstract: We investigate the joint effects of strategy and structure in professional service firms (PSFs) to examine any interaction effect such choices may result in. Our theory development suggests an inverted U-shaped relationship between leverage ratio (between junior and senior professionals) and performance, and a positive relationship between service line diversification and performance. Further we expect that the variation in leverage ratio across service lines will suppress (negatively mediate) the diversification-performance relationship such that diversification is positively associated with the variation in leverage ratio which in turn is negatively associated with performance. We test these relationships using fixed-effects panel regression on data from 75 law firms from 2003 to 2012. We find support for all hypotheses, indicating linkages between strategy and structure of a PSF.

Title: Should I Stay or Should I Go? Making Sense of and Reacting to Rare Events

Authors

  • Caterina Moschieri, IE Business School
  • Helena Pinto de Sousa, IE Business School
  • Daniel Blake, IE Business School

Abstract: This paper links the threat-rigidity and corporate strategy literatures to advance knowledge on how firms interpret and react to rare events. We explore the managerial sensemaking process and strategic reactions following a rare event by focusing on whether or not firms choose to undertake a divestiture. Relying on an inductive comparative study of ten multinational firms involved in a rare but serious policy dispute with a host government, we describe an iterative process where sensemaking is intertwined with the assessment of firm capabilities, resulting in divergent attempts to shape the environment and ultimately different strategic reactions. By integrating capability assessment with environmental sensemaking, our framework and findings contribute to a more holistic understanding of how organizations make sense of and react to rare events.

All Sessions in Track F...

Sun: 08:00 – 09:15
Session 193: Phenomenon-driven Research in Strategic Management
Sun: 09:45 – 11:00
Session 221: Reflecting on the scope of the firm: New avenues for future research
Sun: 11:15 – 12:30
Session 194: The State and Future of Disciplinary Research in Strategic Management
Sun: 16:15 – 17:30
Session 113: Serial Acquisitions: Strategies and Processes
Sun: 17:45 – 00:00
Session 314: Corporate Strategy Business Meeting
Mon: 08:00 – 09:15
Session 111: Portfolio Management: Diversification and Divestitures
Session 176: Different Perspectives Informing Governance Choices: Partner Choice in Alliances vs. Acquisitions
Mon: 11:15 – 12:30
Session 195: Where Are the Boundaries of Strategic Management Research?
Session 210: M&A/JV Implementation
Mon: 16:45 – 18:00
Session 112: Acquisitions - Before the Deal
Session 243: Competitive Dynamics and Market Positioning
Tue: 08:00 – 09:15
Session 115: Horizontal and Vertical Scope: Interactions and Embeddedness
Session 272: Competitive Dimensions of Firm Boundary and Location Decisions
Tue: 11:00 – 12:15
Session 117: Issues and Answers for the Diversified Firm
Session 145: Strategic Leadership and Corporate Strategy
Tue: 14:15 – 15:30
Session 58: Corporate VCs and spin-outs
Session 116: Acquisitions - After the Deal
Session 267: Healthcare Industry Dynamics, Relationships, and Activities
Tue: 15:45 – 17:00
Session 110: Models of Corporate Strategies
Tue: 17:30 – 18:45
Session 114: The Interplay Between Financial Markets & Advisors and the Acquiring Firm
Session 271: Spinouts


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