Date of Award
Doctor of Philosophy (PhD)
Business Administration-Strategic Management
Kae H. Chung
G. Steven Rhiel
This research explored two major functions of corporate strategic management, corporate diversification (core-business relatedness) and corporate control, and their implications for divisional strategic management. Four research questions were raised to address these issues: (1) does core-business relatedness matter to division performance? (2) how does core-business relatedness influence corporate control? (3) how does core-business relatedness influence division risk-taking strategies and performance? and (4) how does corporate control influence division risk-taking strategies and performance?
Adopting the resource-based view and organizational learning theory, this study proposed that core-business related divisions would outperform unrelated divisions and that core-business related divisions would have higher commitment to risk-taking strategies than would unrelated divisions. From a strategic management perspective, it was hypothesized that corporate control would be differentiated by core-business relatedness. Viewing the relationship between a corporate office and its divisions from an agency theoretical perspective, this study suggested that corporate control would influence division risk-taking strategy. Finally, from a strategic management perspective, this study proposed the moderating effects of core-business relatedness and corporate control on the relationship between division risk-taking strategy and performance.
Korean business groups were selected as samples because they provided objective divisional performance data. Data was collected from 57 affiliated companies of 32 Korean business groups. Two indicators of risk-taking strategy were used to test the hypotheses: R&D investment and internationalization. T-test, analysis of variance, analysis of covariance, and multiple regression analysis were used to test the hypotheses.
The results show that core-business relatedness positively influences division performance. Core-business relatedness was found to positively affect divisional R&D investment but not divisional internationalization. Corporate control was found to be not differentiated by core-business relatedness. The moderating effect of core-business relatedness on the relationship between division risk-taking strategies and performance was not found. The results show that decentralized corporate control positively influenced division R&D investment. In contrast, centralized corporate control positively influenced division internationalization. The moderating effect of corporate control was not found.
Kim, Hae R..
"The Effects of Corporate Diversification and Control on Division Risk-Taking Strategy and Performance"
(1998). Doctor of Philosophy (PhD), Dissertation, , Old Dominion University, DOI: 10.25777/gnfm-5r35