Multidivisional Strategy and Investment Returns

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...

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Bibliographic Details
Published in:Journal of economics & management strategy 2013-09, Vol.22 (3), p.594-616
Main Author: Natividad, Gabriel
Format: Article
Language:English
Subjects:
Distributors
Diversification
Economic activity
Firm theory
Investment analysis
Investment policy
Investment returns
Profitability
Rates of return
Studies
U.S.A
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Summary: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.
ISSN:1058-6407
1530-9134
DOI:10.1111/jems.12018