Capturing Synergy in the Growing Multi-Business Firm

摘要

A feedback simulation model is presented which operationalizes a dynamic theory linking managerial policies to under performance of a related diversified firm. Simulation experiments demonstrate how boundedly rational managerial policies for resource sharing unintentionally undermine the gains in performance, even when the economies of scope benefits are considerable. Overstretching shared resources results in rising coordination costs, specifically opportunity costs of lost sales, which decrease sales across the combined businesses. Unless the implementation of resource sharing is managed properly, these coordination costs may undermine the economies of scope benefits for a related diversification move. Allocation of shared resources between business activities or business units is a crucial corporate policy, and is an important behavioral element in the model. The growth and underinvestment and eroding goals generic structures, which have been highlighted in numerous single business models, are also prominent components of the multi-business model discussed in this paper.