Raphael Amit

Raphael Amit
University of Pennsylvania | UP · The Wharton School

PhD

About

110
Publications
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Publications

Publications (110)
Chapter
This chapter develops the concept of business model innovation (BMI) strategy, which refers to the choices made by entrepreneurial leaders of incumbents and start-ups, in for-profit and not-for-profit or hybrid organizations, with respect to (1) the design of a new system of activities; (2) the processes, including their antecedents, by which the n...
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Managers and designers of innovative business models that are enabled by emerging technologies need to build legitimacy with ecosystem participants. Yet increasing legitimacy within the ecosystem raises competitors’ incentives to imitate the business model innovators and thereby adversely affecting the innovators’ ability to appropriate value. We r...
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This article reviews the existing literature about the most prevalent form of corporate ownership around the world: ownership by individuals—particularly founders—and families. We summarize the existing evidence about the prevalence and persistence of family ownership around the world, along with its impact on performance—both financial and non-fin...
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Research Summary This paper explores the stock market performance of acquisitions and divestitures where both, one, or neither of the companies in the transaction are family firms. We find that acquirer shareholder returns are highest when family firms buy businesses from non‐family firm divesters, especially when family CEO acquirers buy businesse...
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The most striking features of business life at the turn of the millennium are volatility, turbulence, and unpredictability. New winners emerge quickly and unexpectedly; established leaders decline or disappear. Foster and Kaplan, for example, found that turnover in the S&P 90 increased from about 1.5 percent per year during the 1920s and 1930s to n...
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As the twenty‐first century begins to unfold, e‐commerce, with its dynamic, rapidly growing and highly competitive characteristics, promises new avenues for the creation of wealth. Many established firms are creating new on‐line businesses, while new ventures are exploiting the opportunities the Internet provides. These developments generated more...
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We propose a conceptual framework for examining the value-creation potential embedded into novel, digitally powered resource configurations. We suggest that business digitization calls for firms to adopt a system-based, value-creation-centric perspective for designing and organizing their resource configuration. Our conceptualization of a firm's re...
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It is not only products or services that are becoming obsolete but also organizational processes and systems because they simply no longer create enough value. To seamlessly account for the digitalization of the business and the customer side, new ideas are mandatory, and the whole business model is increasingly becoming the new source of innovatio...
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This paper investigates the relationship between divestitures and firm value in family firms. Using hand-collected data on a sample of over 30,000 firm-year observations, we find that family firms are less likely than non-family firms to undertake divestitures, especially when these companies are managed by family- rather than non-family CEOs. Howe...
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The nature and value of a firm’s resources – especially the firm’s ability to deploy them to enhance their strategic value – are central to strategic management. Advances in information and computing technology that blur firm boundaries reinforce the important role of resource deployments that span firm and industry boundaries (Zott and Amit, Long...
Chapter
This entry provides an introduction to research on business models. The emerging literature highlights the business model as a new unit and level of analysis for scholars of strategic management. It emphasizes a system-level, holistic approach to explaining how firms ‘do business’, and how value is created, not just how it is captured. Researchers...
Article
A firm's business model is a template that depicts the way the firm conducts its business. It describes the system of interdependent activities that are performed by the firm and by its partners and the ways that these activities are linked to each other through transactions in factor and product markets. In this article, we focus on the evolution...
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We review what the financial economics literature has to say about the unique ways in which the following three classic agency problems manifest themselves in family firms: (a) shareholders versus managers, (b) controlling (family) shareholders versus noncontrolling shareholders, and (c) shareholders versus creditors. We also call attention to a fo...
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Anchored in the broad design literature, we derive four antecedents of business model design: goals, templates, stakeholder activities, and environmental constraints. These business model design antecedents are illustrated using interview data from nine new ventures in the peer-to-peer lending space. We proceed with the theoretical development to l...
Article
Business model innovation matters to managers, entrepreneurs, and academic researchers because it represents an often underutilized source of value and, as such, could translate into sustainable performance advantage. Yet, despite the importance of the topic and the increasing attention it has received from researchers, relatively little is known a...
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The strong interest by academic scholars and managers in the business model concept has led to the proliferation of research on the subject by both academics and practitioners. Business models emphasize a system-level, holistic approach towards explaining how firms do business (not what, when or where). As such, a business model is the template ena...
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Anchored in our research on business models, we delineate in this article a future research agenda. We establish that the theoretical and empirical advancements in business model research provide solid conceptual and empirical foundations on which scholars can build in order to explore a range of important, yet unanswered research questions. We dra...
Article
This paper investigates the relationship between divestitures and firm value in family firms. Using hand-collected data on a sample of over 30,000 firm-year observations, we find that family firms are less likely than non-family firms to undertake divestitures, especially when these companies are managed by family rather than non-family-CEOs. Howev...
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Companies, the authors argue, are increasingly turning toward business model innovation as an alternative or complement to product or process innovation. Drawing on extensive research they conducted over the course of the last decade, the authors define a company's business model as a system of interconnected and interdependent activities that dete...
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The paper provides a broad and multifaceted review of the received literature on business models in which we examine the business model concept through multiple subject-matter lenses. The review reveals that scholars do not agree on what a business model is, and that the literature is developing largely in silos, according to the phenomena of inter...
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We test what explains family control of firms and industries and find that the explanation is largely contingent on the identity of families and individual blockholders. Founders and their families are more likely to retain control when doing so gives the firm a competitive advantage, thereby benefiting all shareholders. In contrast, nonfounding fa...
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We highlight business model innovation as a way for general managers and entrepreneurs to create and appropriate value, especially in times of economic change. Business model innovation, which involves designing a modified or new activity system, relies on recombining the existing resources of a firm and its partners, and it does not require signif...
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This study classifies mergers and acquisitions (M&A) into three target groups: (i) those that choose M&A as an alternative to bankruptcy, (ii) highly liquid target firms, and (iii) the remainder of M&A. Each of these categories yields different market responses: stockholders of bankrupt-predicted target firms have the lowest abnormal returns while...
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Building on existing literature, we conceptualize a firm's business model as a system of interdependent activities that transcends the focal firm and spans its boundaries. The activity system enables the firm, in concert with its partners, to create value and also to appropriate a share of that value. Anchored on theoretical and empirical research,...
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We investigate the role played by institutional development in the prevalence and value of family firms, while controlling for the potential effect of cultural norms. China provides a good research lab since it combines great heterogeneity in institutional development across the Chinese provinces with homogeneity in cultural norms, law, and regulat...
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El origen de la innovación parece haberse desplazado desde el producto y el proceso hasta la organización de las actividades de una empresa. Si se considera esto, ¿qué debe tener en cuenta un directivo para abordar una innovación en el modelo de negocio?
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In large U.S. corporations, founding families are the only blockholders whose control rights on average exceed their cash-flow rights. We analyze how they achieve this wedge, and at what cost. Indirect ownership through trusts, foundations, limited partnerships, and other corporations is prevalent but rarely creates a wedge (a pyramid). The primary...
Article
Building on the received literature, we conceptualize a firm's business model as a system of interdependent activities that transcends the focal firm and spans its boundaries. The activity system enables the firm to create value in concert with its partners but also to appropriate a share of the value created. Anchored on theoretical and empirical...
Article
We test what explains family control of firms and industries and find that the explanation is largely contingent on the identity of families and individual blockholders. Founders and their families are more likely to retain control when doing so gives the firm a competitive advantage, thereby benefiting all shareholders. In contrast, nonfounding fa...
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Full-text available
En este artículo, se hace hincapié en la innovación del modelo de negocio como una forma para que los directores generales y los empresarios generen nuevos ingresos y conserven los márgenes, concretamente en tiempos de cambios económicos. La innovación del modelo de negocio reside en la recombinación de los recursos existentes de una empresa y sus...
Chapter
Entrepreneurial activity in North America has steadily increased in the past few decades. For example, the rate of new business registrations in Canada approximately doubled between 1979 and 1989 alone. The entrepreneurial sector is particularly interesting because of its close relationship to innovation and technological progress and the perceptio...
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We examine the fit between a firm's product market strategy and its business model. We develop a formal model in order to analyze the contingent effects of product market strategy and business model choices on firm performance. We investigate a unique, manually collected dataset, and find that novelty-centered business models—coupled with product m...
Chapter
Single family offices (SFOs), which are professional organizations dedicated to managing family wealth and family matters, represent the leading edge of a broad trend in substantial personal wealth accumulation. The worldwide concentration of wealth in the hands of relatively few is well documented. As the rich grow even richer, and particularly as...
Article
In July 2004, Shiv, Nand, and Uday Khemka are discussing their holdings in SUN Interbrew, a leading Russian beer producer that is part of the family's global portfolio of businesses. SUN Interbrew has been operating as a joint venture since 1998, when the Khemka family, who founded its predecessor company SUN Brewing in the early 1990s, decided to...
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The World Bank Group Entrepreneurship Survey measures entrepreneurial activity around the world. The database includes cross-country, time-series data on the number of total and newly registered businesses for 84 countries. This paper finds significant relationships between entrepreneurial activity and indicators of economic and financial developme...
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In large U.S. corporations, founding families are the only blockholders whose control rights on average exceed their cash-flow rights. We analyze how they achieve this wedge, and at what cost. Indirect ownership through trusts, foundations, limited partnerships, and other corporations is prevalent but rarely creates a wedge (a pyramid). The primary...
Article
The Ayala Corp. case focuses on three unique aspects of the company's financial and corporate strategy from which there are important lessons to be drawn. First, for a company that has been owned and managed by the same family for seven generations, Ayala is remarkably open to public investors. This financial strategy is in stark contrast with that...
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In late 2004, Hilmi Panigoro, CEO of the publicly traded Indonesian oil company Medco Energi Internasional, is striving to regain majority control of the company his brother Arifin founded in 1980. The Asian financial crisis of 1999 led to a major restructuring that left the Panigoros with a 34.1% equity stake in Medco. Two other large shareholders...
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In this paper, we explore the fit between a firm's product market strategy, and its business model.
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We develop a market equilibrium model that captures the dynamics of venture fi- nancing in the presence of imperfections in the venture capital market. Specifically, we study the effects of frictions associated with search, bargaining and segmentation from other asset classes on fund size, pre-money valuation, and average returns to investors. By s...
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An analysis of the impact of alliance activity during the period 1989-1993 on the performance of organizations in the US computing industry reveals that: (1) the distribution of alliance activity is skewed to firms with greater market power, capacity, as well as greater technical, commercial, social and organizational capital; (2) self-selection is...
Article
SUBJECT AREAS: family owned businesses, valuation, recapitalization, stockholders CASE SETTING: April 2000, plumbing fixtures industry, Kohler (Wisconsin, U.S.A.) Kohler Co., best known for its plumbing fixtures, is a large private family firm. As part of a recapitalization aimed at preserving family ownership of Kohler Co., non family shareholders...
Article
Using proxy data on all Fortune-500 firms during 1994–2000, we find that family ownership creates value only when the founder serves as CEO of the family firm or as Chairman with a hired CEO. Dual share classes, pyramids, and voting agreements reduce the founder's premium. When descendants serve as CEOs, firm value is destroyed. Our findings sugges...
Chapter
The expansion and development of global financial markets has led to a rapid rise in foreign IPOs and listings. As the opportunities for financing ventures have increased significantly, so has the complexity of decisions facing entrepreneurs and others who need to tap into these markets. When equity can be sourced virtually anywhere in the world, h...
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Using proxy data on all Fortune-500 firms during 1994–2000, we find that family ownership creates value only when the founder serves as CEO of the family firm or as Chairman with a hired CEO. Dual share classes, pyramids, and voting agreements reduce the founder's premium. When descendants serve as CEOs, firm value is destroyed. Our findings sugges...
Article
The expansion and development of global financial markets has led to a rapid rise in foreign IPOs and listings. As the opportunities for financing ventures have increased significantly, so has the complexity of decisions facing entrepreneurs and others who need to tap into these markets. When equity can be sourced virtually anywhere in the world, h...
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Full-text available
Systematic differences in the determinants of firm failure between firms that fail early in their life and those that fail after having successfully negotiated the early liabili-ties of newness and adolescence are identified. Analysis of data from 339 Canadian corporate bankruptcies suggests that failure among younger firms may be attributable to d...
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This paper examines the factors underlying firm failure, and compares the failure mechanisms for young firms against those of older organizations. This paper suggests that there are systematic differences between the determinants of firm failure for firms that fail early in life and those that fail after having successfully negotiated the early lia...
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Ce document comprend un examen des facteurs qui sous-tendent l'échec d'une entreprise ainsi qu'une comparaison des mécanismes qui mènent à la faillite des jeunes entreprises et des plus anciennes. Il donne à penser qu'il existe des différences systématiques entre les déterminants des faillites qui surviennent très tôt et de celles qui se produisent...
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This study examines the adoption of new products and processes in the Australian retail banking industry over the 1981 to 1995 period. Our analysis demonstrates that the vast majority of observed innovative activity was based on ideas sourced from outside the focal firm, and that innovations diffused very quickly across competing banks. As such, th...
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Syndication arises when venture capitalists jointly invest in projects. We model and test two possible reasons for syndication: project selection, as an additional venture capitalist provides an informative second opinion; and complementary management skills of additional venture capitalists. The central question is whether venture capitalists are...
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A working paper in the INSEAD Working Paper Series is intended as a means whereby a faculty researcher's thoughts and findings may be communicated to interested readers. The paper should be considered preliminary in nature and may require revision.
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We explore the theoretical foundations of value creation in e-business by examining how 59 American and European e-businesses that have recently become publicly traded corporations create value. We observe that in e-business new value can be created by the ways in which transactions are enabled. Grounded in the rich data obtained from case study an...
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The desire to attain personal wealth has long been regarded as the foremost motive for entrepreneurship. Other goals and values, however, may also contribute to entrepreneurial motivation. Thus, the extent to which money matters relative to other motives is an empirical question. In this study we examine the role of wealth as the motive for the dec...
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Managers of corporate parents and their ventures have long been faced with the question of how closely to tie the parent and venture. A close connection may enable a venture to capitalize on the competencies and resources of the parent. However, venture autonomy could prevent corporate inertia and bureaucracy from constraining venture growth.The la...
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This paper investigates strategies for value creation of e-commerce companies. Our main assumption is that e-commerce fundamentally affects the way business is conducted across many industries. To support this insight, we discuss the unique characteristics of 'virtual markets' brought on by the Internet. Based on a survey of 30 European e-commerce...
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The factors that influence firm failure early and late in their development are empirically evaluated. We argue that there are systematic differences between the determinants of firm failure for firms that fail early in life and those that fail after having successfully negotiated the early liabilities of newness and adolescence. Data from 246 Cana...
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and from participants at a faculty seminar at the Wharton School. We are particularly grateful to the Special Issue editors and two anonymous referees for their most helpful and constructive suggestions and comments.
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This paper explores a long-standing dilemma in corporate venture management: How closely should the corporate parent link itself with a venture? We challenge the conventional view that autonomy is best for venture growth, arguing instead that access to the parent's resources and capabilities is essential if a venture is to demonstrate competitive a...
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HRM processes refer to the deeply-embedded, firm-specific, dynamic routines by which a firm attracts, socializes, trains, motivates, evaluates, and compensates its human resources. This perspective integrates economic considerations with contextual social legitimacy aspects. It provides new lenses on the tacit, and evolutionary aspects of HRM and t...
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This paper investigates the role of venture capitalists. We view their “raison d’être” as their ability to reduce the cost of informational asymmetries. Our theoretical framework focuses on two major forms of asymmetric information: “hidden information” (leading to adverse selection) and “hidden action” (leading to moral hazard). Our theoretical an...
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This paper examines the implications of alternative empowerment regimes on a firm's product quality and profitability when ownership and management of the firm are separated and it faces environmental uncertainties. The analyses of a three-stage game highlight the circumstances under which empowering a manager to make quality investment decisions r...
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Strategies used to defend a firm's bundle of competencies against threats to their rent-producing capacities are outlined. In addition to intelligence activities, two generic defense strategies are examined: Preservation aimed at sustaining rents and Alteration aimed at developing substitutes and making existing competencies more flexible.
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We provide empirical support for the hypothesis that the lower the opportunity costs of individuals, the more likely they are to undertake entrepreneurial activity. This prediction emerged from earlier theoretical work in which we modeled the decision of individuals to develop new ventures on their own, seek the backing of a venture capitalist, or...
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The adverse selection problem that is created because of asymmetry of information about entrepreneurs' attributes and abilities in turning ideas into viable businesses makes it difficult for venture capitalists or corporate executives to identify would-be successful entrepreneurs in advance. To mitigate this, and the related moral-hazard problem, w...
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Why do some new ventures succeed while others fail? What is the essence of entrepreneurship? Who is most likely to become a successful entrepreneur and why? How do entrepreneurs make decisions? What market, regulatory, and organizational environments foster the most successful entrepreneurial activities? Entrepreneurship research is plagued by thes...
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We build on an emerging strategy literature that views the firm as a bundle of resources and capabilities, and examine conditions that contribute to the realization of sustainable economic rents. Because of (1) resource-market imperfections and (2) discretionary managerial decisions about resource development and deployment, we expect firms to diff...
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This study investigates the direct effects of corporate diversification on accounting reports, and the implications of these effects for accounting research. The study shows that firms which diversify into unrelated areas of business devote a larger proportion of their capital investments to acquisitions and are, therefore, characterized by smaller...
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A number of issues that relate to the desirability and implications of new venture financing are examined within a principal-agent framework that captures the essence of the relationship between entrepreneurs and venture capitalists. The model suggests: (1) As long as the skill levels of entrepreneurs are common knowledge, all will choose to involv...
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This study investigates the intertemporal manufacturing policy of a firm faced with dynamic demand conditions and experience effects in production. We consider a demand structure characterized by a Mansfield-like product diffusion process and examine two manufacturing processes: a low-volume, high-variable, low-fixed cost function, and a high-volum...
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This study develops and tests a measure of efficient corporate diversification (ECD) that compares the variability of a firm's revenues with the variability of a minimum-variance portfolio of businesses that maintain the same sales growth rate. According to ECD, which incorporates the exposure of a firm to business cycle fluctuations, a firm is con...
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This study investigates empirically the underlying motives for selecting the mode of corporate diversification and attempts to match the form of capital investments with a corresponding theoretical rationale for diversification. The empirical results seem to support both the transaction-costs rationale for diversification and the motive that arises...
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This study develops and tests a new concept of conglomerate diversification that reflects afirm's sensitivity to the cyclical behavior and differential amplitude of economic sectors throughout the business cycle. The measure is shown to describe unique aspects of conglomerate diversification that are not captured by other commonly used SIC-based di...
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An assessment of opponents' reactions to strategic and functional area policy decisions is shown to require knowledge concerning opponents' beliefs about the firm's behavior. This study introduces a methodology for incorporating such conjectures into the business planning process. It presents an analytical measure for these conjectural variations a...
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This article presents several abstracts related to business and commerce. Some of the articles featured discuss topics such as; the business strategies for supermarkets, the benefits of industrial diversification and an examination of the factors that influence group decision making processes for physicians.
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Two major diversification strategies of firms are examined: diversification into related businesses and diversification into unrelated businesses. The first strategy attempts to exploit operating synergies. In the second, the firm attempts to gain financial benefits from its ability to increase leverage due to a greater stability of cash flows. The...
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This study uses theoretical considerations to empirically examine the effects of various diversification strategies on the capital structure of firms and on the systematic risk. It documents that firms reduce their operating risk by diversification and increase financial leverage to take advantage of tax benefits. A cross-sectional path analysis is...
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We formulate an investment and production model that incorporates the relationships between extraction rates, investment decisions and cumulative recovery, and investigate a two-phase dynamic optimization problem. We do so by defining and analyzing a more general optimization problem and applying the results to our model. The major findings relate...