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Feature Article: A Resource-Based Perspective on Business Strategies of Newly Founded Subsidiaries: The Case of German Pensionsfonds

Authors

  • Thomas R. Berry-Stölzle,

    1. Thomas R. Berry-Stölzle, Terry College of Business, University of Georgia, 206 Brooks Hall, Athens, GA 30602; phone: (706) 542-5160; fax: (706) 542-4295; e-mail: trbs@terry.uga.edu. Muhammed Altuntas, University of Cologne, Department of Risk Management and Insurance, D-50923 Cologne; phone: +49-221-470-5805; fax: +49-221-428349; e-mail: Muhammed.Altuntas@uni-koeln.de. The authors would like to thank James M. Carson, Daniel C. Feldman, Andre P. Liebenberg, Charles Nyce, and Heinrich R. Schradin for helpful comments and suggestions on a previous version of this article. All remaining errors are our own. This article was subject to double-blind peer review.
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  • Muhammed Altuntas

    1. Thomas R. Berry-Stölzle, Terry College of Business, University of Georgia, 206 Brooks Hall, Athens, GA 30602; phone: (706) 542-5160; fax: (706) 542-4295; e-mail: trbs@terry.uga.edu. Muhammed Altuntas, University of Cologne, Department of Risk Management and Insurance, D-50923 Cologne; phone: +49-221-470-5805; fax: +49-221-428349; e-mail: Muhammed.Altuntas@uni-koeln.de. The authors would like to thank James M. Carson, Daniel C. Feldman, Andre P. Liebenberg, Charles Nyce, and Heinrich R. Schradin for helpful comments and suggestions on a previous version of this article. All remaining errors are our own. This article was subject to double-blind peer review.
    Search for more papers by this author

Abstract

Diversification by firms into unfamiliar areas of business is achieved either by acquisition of an existing business in the destination industry or a greenfield start-up. This article focuses on the business strategy of greenfield start-ups. We theorize and find that firms entering a market by establishing a new subsidiary rely solely on their own preexisting internal resources, making it favorable to align the business strategy of the start-up with the firm's value-generating competencies. Our empirical results, which are based on a sample of German Pensionsfonds and their parent companies, are consistent with the view that the business strategy choice of a newly founded subsidiary is substantially directed by the internal resources and competencies of the parent firm.

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