Resource relatedness, redeployability, and firm value
Article first published online: 10 OCT 2013
Copyright © 2013 John Wiley & Sons, Ltd.
Strategic Management Journal
How to Cite
Sakhartov, A. V. and Folta, T. B. (2013), Resource relatedness, redeployability, and firm value. Strat. Mgmt. J.. doi: 10.1002/smj.2182
- Article first published online: 10 OCT 2013
- Accepted manuscript online: 29 AUG 2013 10:19AM EST
- Manuscript Accepted: 20 AUG 2013
- Manuscript Revised: 16 AUG 2013
- Manuscript Received: 1 OCT 2012
- corporate diversification;
- resource-based view;
- real options;
- formal model
Our paper elaborates the effects of resource relatedness on value of a multibusiness firm. We emphasize that value results from interplay of benefits of synergy and redeployability. This view, considering how synergy and redeployability interact in determining value, extends prior separate considerations of the two benefits. We also diagnose that the value effect of resource relatedness is contingent on uncertainty and specify this contingent relationship. We use the real option valuation approach and formally evaluate the impacts of the two effects of relatedness. This explication enables us to demonstrate how redeployability contributes to value beyond synergy, and how they contribute in tandem. In this sense, we illuminate previously undiagnosed value in multibusiness firms. Beyond theoretical implications, our results have important empirical and managerial implications. Copyright © 2013 John Wiley & Sons, Ltd.