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Deregulation, Firm Capabilities and Diversifying Entry Decisions: The Case of Financial Services

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  • Ingham, Hilary
  • Thompson, Steve

Abstract

The resource-based view of the firm as a historically-determined bundle of specific assets and capabilities predicts that diversification patterns will reflect attempts to utilize these attributes more intensively and so enjoy economies of scope. Furthermore, it suggests that such diversification moves will not be restricted to wholly-owned activities but will include joint ventures where contracting costs permit. This note uses the opportunity created by structural deregulation in U.K. financial services to examine entry decisions-wholly-owned and collaborative-across an unusually homogeneous set of firms. It is found that diversifying entry broadly follows firm-specific and product-specific characteristics, providing support for the resource-based theory in the service sector. However, as in manufacturing it appears that firm size is important, whilst the residual regulatory and ownership arrangements also exercise a significant effect. Copyright 1995 by MIT Press.

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  • Ingham, Hilary & Thompson, Steve, 1995. "Deregulation, Firm Capabilities and Diversifying Entry Decisions: The Case of Financial Services," The Review of Economics and Statistics, MIT Press, vol. 77(1), pages 177-183, February.
    • Handle: RePEc:tpr:restat:v:77:y:1995:i:1:p:177-83
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    Cited by:

    1. Kowalewski, Oskar, 2023. "Organizational mode choices of multinational banks abroad," Global Finance Journal, Elsevier, vol. 57(C).
    2. Michelle Haynes & Steve Thompson, 1999. "Merger Activity and Employment: Evidence from the UK Mutual Sector," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 26(1), pages 39-54, March.
    3. Steve Thompson, 1999. "Increasingly Marginal Utilities: Diversification and Free Cash Flow in Newly Privatized UK Utilities," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 15(1), pages 25-42, August.
    4. Haynes, Michelle & Thompson, Steve, 1999. "The productivity effects of bank mergers: Evidence from the UK building societies," Journal of Banking & Finance, Elsevier, vol. 23(5), pages 825-846, May.
    5. Kettunen, Janne & Bunn, Derek W., 2016. "Risk induced resource dependency in capacity investments," European Journal of Operational Research, Elsevier, vol. 250(3), pages 914-924.
    6. Barbara Roberts & Steve Thompson, 2003. "Entry and Exit in a Transition Economy: The Case of Poland," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 22(3), pages 225-243, May.
    7. Oleg Curbatov & Marie Louyot-Gallicher, 2015. "Knowedge Marketing," Post-Print hal-01423209, HAL.
    8. Canabal, Anne & White III, George O., 2008. "Entry mode research: Past and future," International Business Review, Elsevier, vol. 17(3), pages 267-284, June.
    9. Thompson, Steve, 1997. "Takeover activity among financial mutuals: An analysis of target characteristics," Journal of Banking & Finance, Elsevier, vol. 21(1), pages 37-53, January.
    10. Lucio Fuentelsaz & Jaime Gomez, 2001. "Strategic and Queue effects on Entry in Spanish Banking," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 10(4), pages 529-563, December.
    11. Haynes, Michelle & Thompson, Steve & Wright, Mike, 2000. "The determinants of corporate divestment in the UK," International Journal of Industrial Organization, Elsevier, vol. 18(8), pages 1201-1222, December.

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