Diversification to Achieve Scale and Scope: The Strategic Implications of Resource Management for Value Creation

Advances in Strategic Management: Ecology and Strategy, Vol. 23, pp. 549-587, 2006

39 Pages Posted: 29 Dec 2008

See all articles by Tim R. Holcomb

Tim R. Holcomb

Miami University

R. Michael Holmes

Florida State University - Department of Management

Michael A. Hitt

Texas A&M University - Department of Management; Texas Christian University

Date Written: December 1, 2006

Abstract

Research on diversification has produced insights into possible linkages between organizational scale and scope and firm performance. However, the paucity of research on its implementation has hindered our understanding of the broader performance implications of these strategies. We extend the resource-based view and diversification research by examining how firms can exploit diversifying investments designed to achieve scale and scope economies. Successful firms more effectively structure their resource portfolio, bundle resources into capabilities, and leverage these capabilities when implementing diversification strategy. We develop a model linking strategies by which firms expand product and geographic market scope to the actions they take to manage resources. We examine three actions-internal development, acquisitions, and strategic alliances-and discuss the implications of these actions using the resource management framework.

Keywords: Diversification, resource-based view, resource management, resource-based view

Suggested Citation

Holcomb, Tim R. and Holmes, R. Michael and Hitt, Michael A., Diversification to Achieve Scale and Scope: The Strategic Implications of Resource Management for Value Creation (December 1, 2006). Advances in Strategic Management: Ecology and Strategy, Vol. 23, pp. 549-587, 2006, Available at SSRN: https://ssrn.com/abstract=1321056

Tim R. Holcomb (Contact Author)

Miami University ( email )

Farmer School of Business
800 E. High Street, 2075 FSB / MSC1148
Oxford, OH Ohio 45056
United States
5135293665 (Phone)

HOME PAGE: http://fsb.miamioh.edu/

R. Michael Holmes

Florida State University - Department of Management ( email )

United States

Michael A. Hitt

Texas A&M University - Department of Management ( email )

430 Wehner
College Station, TX 77843-4218
United States
979-458-3393 (Phone)

Texas Christian University ( email )

Fort Worth, TX 76129
United States

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