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Corporate Diversification, Value Maximization, and Organizational Capabilities
Open accessAbstract
This article develops a dynamic model of a firm in which diversification can be a value-maximizing strategy even if specialization is generally efficient. The central idea is that firms are comprised of organizational capabilities that can be profitable in multiple businesses and that diversification is a search process by which firms seek businesses that are good matches for their capabilities. The theory can account for diversified firms trading at discounts compared to single-segment firms, as well as some empirical regularities that are challenging to the agency theory of diversification, such as positive returns to diversification announcements.
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Citations
Cited by
Controlling for endogeneity with instrumental variables in strategic management research
Bascle, G. (2008) · Strategic Organization · doi:10.1177/1476127008094339 · Cited by 1,133
A capability theory of the firm: an economics and (Strategic) management perspective
Teece, D. J. (2019) · New Zealand Economic Papers · doi:10.1080/00779954.2017.1371208 · Cited by 426
The Cost of Diversity: The Diversification Discount and Inefficient Investment
Rajan, R. G., Servaes, H., & Zingales, L. (1998) · SSRN Electronic Journal · doi:10.2139/ssrn.56108 · Cited by 409
Metadata
- Authors
- Matsusaka, J. G.
- Venue
- The Journal of Business
- Publisher
- University of Chicago Press
- Published
- 2001-07
- Volume
- 74
- Issue
- 3
- Pages
- 409-431
- ISSN
- 0021-9398 (ISSN-L)
- 1537-5374
- OpenAlex
- W2001014246
- Cited by
- 359
- References
- 0
- FWCI
- 40.51
- Type
- journal article
- Language
- en
- Open access
- green
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- CoChat. (2026). Citation check: Corporate Diversification, Value Maximization, and Organizational Capabilities. https://app.cochat.ai/papers/10.1086/321932
- The paper
- Matsusaka, J. G. (2001). Corporate Diversification, Value Maximization, and Organizational Capabilities. The Journal of Business. https://doi.org/10.1086/321932
Data sources
Bibliographic data: Semantic Scholar, OpenAlex, Crossref.
Contains information from the Semantic Scholar Academic Graph Datasets, made available under the ODC Attribution License (ODC-BY 1.0).
Semantic Scholar’s data is described in: Kinney, R., et al. (2023). The Semantic Scholar Open Data Platform. arXiv:2301.10140.
