In the Eyes of the Beholder: Conceptualizations of Relatedness Held by the Managers of Large Diversified Firms

Stimpert, J. L.; Duhaime, Irene M.

doi:10.1002/(sici)1097-0266(199702)18:2<111::aid-smj856>3.0.co;2-8

Cited by 66 publications

(71 citation statements)

References 6 publications

(9 reference statements)

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“…Criterion (4) is addressed implicitly by building the index on a census of all firms in the US manufacturing economy down to firms with three employees. The importance of criterion (4) is suggested by the work of Stimpert and Duhaime (1997) and Pehrsson (2006), who have shown that conceptualizations of relatedness are multidimensional by analyzing managers' answers to a series of questions about the relationships between their businesses. The…”

Section: Issues In Developing a General Relatedness Indexmentioning

confidence: 99%

“…Herfindahl and entropy measures are strongly correlated to product market conceptualizations of relatedness, but other conceptualizations-such as financial, or commodity relatedness-are inadequately measured by standard indices (Stimpert and Duhaime, 1997). If these other conceptualizations are systematically employed by managers in actual diversification moves (e.g.…”

Section: Issues In Developing a General Relatedness Indexmentioning

confidence: 99%

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A General Interindustry Relatedness Index

2009

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For empirical work in the resource-based view of the firm, characterizing the resources that are responsible for firm growth is difficult because valuable resources are often tacit, ambiguous, or difficult to identify. This is a particular problem for empirical assessments that rely upon the concept of relatedness between resources to characterize the direction of growth of the firm. We tackle the problem for the general case by developing a general interindustry relatedness index. The index harnesses the relatedness information embedded in the multiproduct organization decisions of every diversified firm in the U.S. manufacturing economy. The index is general in that it can be used across industry contexts without requiring explicit identification of resources and it provides a percentile relatedness rank for every possible pair of four-digit Standard Industrial Classification manufacturing industries. The general index is tested for predictive validity and found to perform as expected. Applications of the index in strategy research are suggested. The research program of the Center for Economic Studies (CES) produces a wide range of theoretical and empirical economic analyses that serve to improve the statistical programs of the U.S. Bureau of the Census. Many of these analyses take the form of CES research papers. The papers are intended to make the results of CES research available to economists and other interested parties in order to encourage discussion and obtain suggestions for revision before publication. The papers are unofficial and have not undergone the review accorded official Census Bureau publications.The opinions and conclusions expressed in the papers are those of the authors and do not necessarily represent those of the U.S. Bureau of the Census. Republication in whole or part must be cleared with the authors. All papers are screened to ensure that they do not disclose confidential information. A GENERAL INTER-INDUSTRY RELATEDNESSPersons who wish to obtain a copy of the paper, submit comments about the paper, or obtain general information about the series should contact Sang V. Nguyen, Editor AbstractFirm growth and expansion is widely believed to be guided by the desire to leverage existing resources. But which resources? The answer depends largely on context-the peculiarities of industries, firms, technologies, production, customers, and a host of other dimensions. This fact makes pointing to any particular set of resources as the source of expansion decisions potentially problematic and makes more difficult tests of theories such as the resource-based view of the firm. This paper tackles the problem by developing a general inter-industry relatedness index that can be usefully applied across industry and firm contexts. The index harnesses the relatedness information embedded in the multi-product organization and diversification decisions of every firm in the US manufacturing economy. The index is general in that it implicitly varies the underlying resources upon which expansion proc...

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Section: Issues In Developing a General Relatedness Indexmentioning

confidence: 99%

Section: Issues In Developing a General Relatedness Indexmentioning

confidence: 99%

A General Interindustry Relatedness Index

2009

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“…Importantly, such observations strongly imply that a firm's strategy development in general does not follow sudden and unanticipated changes (Stuart and Podolny, 1996). Current research, moreover, acknowledges multiple and interacting bases of perceived relatedness (Farjoun, 1998;Stimpert and Duhaime, 1997) where physical and resource attributes can appropriately be employed in studying perceived relatedness and its effects on performance. The physical base concerns relations between apparent product characteristics, whereas the resource base pays attention to skills and other key resources.…”

Section: Relatedness and Performance Of The Establishmentmentioning

confidence: 99%

Strategy competence: a study of successful business establishments

Pehrsson

2004

Strategic Change

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᭹ This article presents a study of the link between strategy competence and performance in the context of international business establishments. The concept of strategy competence encompasses business relatedness and market familiarity. ᭹ The empirical findings are based on a study of 173 Swedish ventures in Germany and show that high relatedness between the core business and the local business, in terms of similar requirements for management skills and brand recognition, leads to high performance of the local business.At the same time, extensive experience of business strategies of local competitors leads to higher performance.᭹ In light of the research findings, management would be well advised to strive for high resource relatedness between the market entry business and the core business of the firm and to focus on the build-up of key market experiences, such as knowledge of the business strategies of local competitors.

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“…The indices presented capture a multidimensional concept (Pehrsson 2006, Stimpert & Duhaime 1997, but are free of researchers' bias since they will not require combining different elements of relatedness into an index with predefined weights (Lien & Klein, 2009). The indices proposed however are not context free.…”

Section: Discussionmentioning

confidence: 99%

“…Firms resort to local search in the development of organizational routines and more broadly organizational learning (e.g., Levitt & March, 1988;March, 1991;Nelson & Winter, 1982;Simon, 1991). Research in the 'upper echelons' tradition (e.g., Carpenter, Geletkanycz, & Sanders, 2004;Hambrick & Mason, 1984) has also demonstrated that top managers' background, experiences, and values influence strategic decisions including corporate change (Goodstein, Gautam, & Boeker, 1994), product diversification (Farjoun & Lai, 1997;Pehrsson, 2006;Stimpert & Duhaime, 1997), international diversification (Tihanyi, Ellstrand, Daily, & Dalton, 2000), and product innovation (Tripsas & Gavetti, 2000).…”

Section: Literature Review Local Search Anchoring and Decision Makingmentioning

confidence: 99%

A Fresh Look at Decision Making in International Investment Choices: Firm International Coherence and Home-Host Country Relatedness

Celo¹

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In the Eyes of the Beholder: Conceptualizations of Relatedness Held by the Managers of Large Diversified Firms

Cited by 66 publications

References 6 publications

A General Interindustry Relatedness Index

A General Interindustry Relatedness Index

Strategy competence: a study of successful business establishments

A Fresh Look at Decision Making in International Investment Choices: Firm International Coherence and Home-Host Country Relatedness

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