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Resource relatedness, redeployability, and firm value
Author(s) -
Sakhartov Arkadiy V.,
Folta Timothy B.
Publication year - 2014
Publication title -
strategic management journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 11.035
H-Index - 286
eISSN - 1097-0266
pISSN - 0143-2095
DOI - 10.1002/smj.2182
Subject(s) - explication , value (mathematics) , valuation (finance) , resource (disambiguation) , microeconomics , economics , enterprise value , industrial organization , business , computer science , epistemology , computer network , philosophy , accounting , finance , machine learning
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.