Work

The Strategic Impact of Resource Flexibility in Business Groups

Year: 2003

Type: article

Abstract: The strategic impact of resource flexibility in business groups Giacinta Cestone∗ Chiara Fumagalli∗∗ Barcelona Economics WP n.49 We show that in business groups with efficient internal capital markets resources may be channelled to either more or less profitable units. Depending on the amount of internal resources, a group may exit a market in response to increased competition, or channel funds to the subsidiary operating in that market. This has important implications for the strategic impact of group membership. Affiliation to a monopolistic subsidiary can make a cash-rich (poor) stand-alone more (less) vulnerable to entry deterrence. Also, resource flexibility within a group makes subsidiaries’

Source: DIGITAL.CSIC (Spanish National Research Council (CSIC))

Authors: Giacinta Cestone, Chiara Fumagalli

Institutions: Universitat Autònoma de Barcelona, Bocconi University

Language: English

Topic: Corporate Finance and Governance

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: green

OpenAlex ID: W1572569204

FWCI: 1.49

Cites: 46

Cited by: 96

Related to: 10