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Multidivisional Strategy and Investment Returns

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  • Gabriel Natividad

Abstract

This paper studies the influence of multidivisional structure on investment returns using a large database of projects in the U.S. film distribution industry, a setting in which divisionalization exists without horizontal diversification—all divisions of multidivisional distributors release feature films. The findings are consistent with a positive effect of multidivisional strategy on investment returns, even if total investment need not increase. Multidivisional strategies are more consequential for higher profitability when firms share key human talent across their divisions.

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  • Gabriel Natividad, 2013. "Multidivisional Strategy and Investment Returns," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 22(3), pages 594-616, September.
    • Handle: RePEc:bla:jemstr:v:22:y:2013:i:3:p:594-616
    DOI: 10.1111/jems.12018
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    Cited by:

    1. Hong Luo, 2014. "When to Sell Your Idea: Theory and Evidence from the Movie Industry," Management Science, INFORMS, vol. 60(12), pages 3067-3086, December.
    2. Venkat Kuppuswamy & Carliss Y. Baldwin, 2012. "Risky Business: The Impact of Property Rights on Investment and Revenue in the Film Industry," Harvard Business School Working Papers 13-007, Harvard Business School, revised Aug 2012.
    3. Mehmet Nasih Tağ, 2022. "The Dark Side of Firm Diversity: An Empirical Examination of the Impact of Firm Diversity on Resource Allocation Efficiency in Multidivisional Firms," Istanbul Business Research, Istanbul University Business School, vol. 51(2), pages 643-668, November.
    4. Dan Lovallo & Alexander L. Brown & David J. Teece & David Bardolet, 2020. "Resource re‐allocation capabilities in internal capital markets: The value of overcoming inertia," Strategic Management Journal, Wiley Blackwell, vol. 41(8), pages 1365-1380, August.

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