How to assess the corporate parenting strategy? A conceptual answer

Abstract

PurposeThe major purpose of this paper is the development of a theoretical framework that can be used by corporate practitioners to understand the implicit parenting strategy of their company, assess its performance, and adjust it for improving the net corporate value creation.Design/methodology/approachIn this paper, a three‐dimensional framework is developed that accounts for corporate‐to‐business and business‐to‐business interactions, value‐adding and value‐destroying activities, and strategic and operational levers. The framework is operationalized by assigning a broad set of individual activities to these levers.FindingsThe paper delivers a robust, systematic, and operational framework to assess the net benefits to a given business of being part of a corporate portfolio, and to identify and evaluate implicit parenting strategies in corporate practice. While previous studies mainly focused on broad parenting approaches with low granularity this framework now allows earlier observations to be substantiated, finer distinctions between the applied strategies to be drawn, and the core of superior value added approaches to be investigated.Practical implicationsThe introduced framework can be used to analyze the origin and underlying drivers of conglomerate discounts and premia and thus enhance understanding of capital market valuation of multi‐business companies. The developed framework can also be the basis for the derivation of a typology of corporate parenting strategies. In this way, it can support practitioners in portfolio management – which was also the explicit motivation for the development of the original parenting advantage concept.Originality/valueThe outlined framework will facilitate the investigation of structural, strategic, and organizational roots of superior parenting strategies in corporate practice. It may be used to analyze performance differences of multi‐business companies that go beyond the degree of diversification and may finally contribute to solving the puzzle of the conglomerate discount.

The corporate parenting advantage, revisited

“…Interestingly, though, empirical evidence of the corporate parenting advantage is sparse. Some research has produced theoretical arguments about and practical examples of the ways in which corporate parents might improve the performance of their subsidiaries (Foss, 1997;Goold et al, 1994;Goold, Campbell, & Alexander, 1998;Kruehler, Pidun, & Rubner, 2012). A few studies have investigated the contingencies in which corporate parents might add more or less value to their subsidiaries (Collis, Young, & Goold, 2007;Nell & Ambos, 2013;Poppo, 2003).…”

Social Sustainability: Satisfying Owners and Communities by Multilevel Strategies of Contractors

“…Regardless of the form of expansion, parenting should add value to the contractor's target businesses. The value-added role of parenting can be achieved when the contractor, as a parent, understands the critical success factors and specific needs of the businesses [42] and has or can develop the competencies, skills, and resources necessary for this role. The contractor then allocates more resources to the businesses so that their values can be vastly increased by the parenting role.…”

Kesesuaian Pengasuhan Perusahaan Multibisnis: Studi Kasus Kelompok Bisnis “Media Group”

“…Namun dalam praktiknya, kesesuaian pengasuhan relatif sulit diterapkan karena operasionalisasi faktor-faktornya (Kruehler et al, 2012). Penelitian pada perusahaan multibisnis MG diharapkan dapat memperoleh pemahaman yang lebih mendalam mengenai garis besar faktor-faktor yang digunakan untuk mengetahui kesesuaian pengasuhan perusahaan induk dan perusahaanperusahaan anak.…”

“…Dalam penelitian ini, "No Kode Perusahaan" selanjutnya akan digunakan secara konsisten untuk merujuk pada entitas perusahaan anak. Data primer diperoleh terutama melalui wawancara dengan para anggota direksi, baik diperusahaan induk maupun perusahaan-perusahaan anak, juga dengan sekretaris perusahaan MG. Protokol wawancara dikembangkan dari hasil studi terdahulu yang dilakukan oleh Aslibergi dan Rahmanseresht (2014); Campbell et al (1995); Collis et al (2012);Hermann (2002); dan Kruehler et al (2012). Protokol observasi dikembangkan dari hasil studi oleh Kruehler et al (2012).…”

“…Hasil pengolahan kemudian dipetakan dalam sebuah matriks yang dikenal sebagai matriks kesesuaian pengasuhan seperti pada Gambar 2. Sesuai dengan studi terdahulu dari Kruehler et al (2012), baik sumbu X maupun sumbu Y menggunakan pernyataan positif: "kesesuaian (fit); bukan "ketidaksesuaian" (misfit).…”