IDEAS home Printed from https://ideas.repec.org/a/bla/jemstr/v22y2013i3p594-616.html
   My bibliography  Save this article

Multidivisional Strategy and Investment Returns

Author

Listed:
  • Gabriel Natividad

Abstract

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.

Suggested Citation

  • Gabriel Natividad, 2013. "Multidivisional Strategy and Investment Returns," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 22(3), pages 594-616, September.
    • Handle: RePEc:bla:jemstr:v:22:y:2013:i:3:p:594-616
    DOI: 10.1111/jems.12018
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/jems.12018
    Download Restriction: no
    File URL: https://libkey.io/10.1111/jems.12018?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Raghuram G. Rajan & Julie Wulf, 2006. "The Flattening Firm: Evidence from Panel Data on the Changing Nature of Corporate Hierarchies," The Review of Economics and Statistics, MIT Press, vol. 88(4), pages 759-773, November.
    2. Katherine Ho & Justin Ho & Julie Holland Mortimer, 2012. "The Use of Full-Line Forcing Contracts in the Video Rental Industry," American Economic Review, American Economic Association, vol. 102(2), pages 686-719, April.
    3. Jehoshua Eliashberg & Sam K. Hui & Z. John Zhang, 2007. "From Story Line to Box Office: A New Approach for Green-Lighting Movie Scripts," Management Science, INFORMS, vol. 53(6), pages 881-893, June.
    4. repec:ner:ucllon:http://discovery.ucl.ac.uk/17678/ is not listed on IDEAS
    5. Ronald L. Goettler & Phillip Leslie, 2005. "Cofinancing to Manage Risk in the Motion Picture Industry," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 14(2), pages 231-261, June.
    6. Mialon, Sue H., 2008. "Efficient horizontal mergers: The effects of internal capital reallocation and organizational form," International Journal of Industrial Organization, Elsevier, vol. 26(4), pages 861-877, July.
    7. BÃ¥rd Harstad, 2007. "Organizational Form and the Market for Talent," Journal of Labor Economics, University of Chicago Press, vol. 25(3), pages 581-611.
    8. Peter G. Klein & Marc R. Saidenberg, 2010. "Organizational Structure And The Diversification Discount: Evidence From Commercial Banking," Journal of Industrial Economics, Wiley Blackwell, vol. 58(1), pages 127-155, March.
    9. Aghion, Philippe & Tirole, Jean, 1997. "Formal and Real Authority in Organizations," Journal of Political Economy, University of Chicago Press, vol. 105(1), pages 1-29, February.
    10. Rebecca Henderson & Iain Cockburn, 1996. "Scale, Scope, and Spillovers: The Determinants of Research Productivity in Drug Discovery," RAND Journal of Economics, The RAND Corporation, vol. 27(1), pages 32-59, Spring.
    11. Anita Elberse & Jehoshua Eliashberg, 2003. "Demand and Supply Dynamics for Sequentially Released Products in International Markets: The Case of Motion Pictures," Marketing Science, INFORMS, vol. 22(3), pages 329-354.
    12. Fauli-Oller, Ramon & Giralt, Magdalena, 1995. "Competition and Cooperation within a Multidivisional Firm," Journal of Industrial Economics, Wiley Blackwell, vol. 43(1), pages 77-99, March.
    13. Darlene C. Chisholm & George Norman, 2006. "When to Exit a Product: Evidence from the U. S. Motion-Picture Exhibition Market," American Economic Review, American Economic Association, vol. 96(2), pages 57-61, May.
    14. Kenneth S. Corts, 2001. "The Strategic Effects of Vertical Market Structure: Common Agency and Divisionalization in the US Motion Picture Industry," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 10(4), pages 509-528, December.
    15. Liran Einav, 2007. "Seasonality in the U.S. motion picture industry," RAND Journal of Economics, RAND Corporation, vol. 38(1), pages 127-145, March.
    16. Julie H. Mortimer, 2008. "Vertical Contracts in the Video Rental Industry -super-1," Review of Economic Studies, Oxford University Press, vol. 75(1), pages 165-199.
    17. Antonio E. Bernardo, 2004. "Capital Budgeting in Multidivision Firms: Information, Agency, and Incentives," Review of Financial Studies, Society for Financial Studies, vol. 17(3), pages 739-767.
    18. Ricard Gil, 2009. "Revenue Sharing Distortions and Vertical Integration in the Movie Industry," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 25(2), pages 579-610, October.
    19. Alberto Abadie & Guido W. Imbens, 2006. "Large Sample Properties of Matching Estimators for Average Treatment Effects," Econometrica, Econometric Society, vol. 74(1), pages 235-267, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Venkat Kuppuswamy & Carliss Y. Baldwin, 2012. "Risky Business: The Impact of Property Rights on Investment and Revenue in the Film Industry," Harvard Business School Working Papers 13-007, Harvard Business School, revised Aug 2012.
    2. Dan Lovallo & Alexander L. Brown & David J. Teece & David Bardolet, 2020. "Resource re‐allocation capabilities in internal capital markets: The value of overcoming inertia," Strategic Management Journal, Wiley Blackwell, vol. 41(8), pages 1365-1380, August.
    3. Hong Luo, 2014. "When to Sell Your Idea: Theory and Evidence from the Movie Industry," Management Science, INFORMS, vol. 60(12), pages 3067-3086, December.
    4. Mehmet Nasih Tağ, 2022. "The Dark Side of Firm Diversity: An Empirical Examination of the Impact of Firm Diversity on Resource Allocation Efficiency in Multidivisional Firms," Istanbul Business Research, Istanbul University Business School, vol. 51(2), pages 643-668, November.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jordi McKenzie, 2023. "The economics of movies (revisited): A survey of recent literature," Journal of Economic Surveys, Wiley Blackwell, vol. 37(2), pages 480-525, April.
    2. Darlene Chisholm & Víctor Fernández-Blanco & S. Abraham Ravid & W. David Walls, 2015. "Economics of motion pictures: the state of the art," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 39(1), pages 1-13, February.
    3. Yanhao Max Wei, 2020. "The Similarity Network of Motion Pictures," Management Science, INFORMS, vol. 66(4), pages 1647-1671, April.
    4. Ronny Behrens & Natasha Zhang Foutz & Michael Franklin & Jannis Funk & Fernanda Gutierrez-Navratil & Julian Hofmann & Ulrike Leibfried, 2021. "Leveraging analytics to produce compelling and profitable film content," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 45(2), pages 171-211, June.
    5. Anita Rao & Wesley Hartmann, 2015. "Quality vs. variety: Trading larger screens for more shows in the era of digital cinema," Quantitative Marketing and Economics (QME), Springer, vol. 13(2), pages 117-134, June.
    6. Ricard Gil & Wesley R. Hartmann, 2009. "Empirical Analysis of Metering Price Discrimination: Evidence from Concession Sales at Movie Theaters," Marketing Science, INFORMS, vol. 28(6), pages 1046-1062, 11-12.
    7. William Goetzmann & S. Ravid & Ronald Sverdlove, 2013. "The pricing of soft and hard information: economic lessons from screenplay sales," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 37(2), pages 271-307, May.
    8. John, Kose & Ravid, S. Abraham & Sunder, Jayanthi, 2017. "Managerial ability and success: Evidence from the career paths of film directors," Journal of Corporate Finance, Elsevier, vol. 44(C), pages 425-439.
    9. Anita Rao & Wesley R. Hartmann, 2015. "Quality vs. variety: Trading larger screens for more shows in the era of digital cinema," Quantitative Marketing and Economics (QME), Springer, vol. 13(2), pages 117-134, June.
    10. Christian Opitz & Kay H. Hofmann, 2014. "Adverse Selection and Moral Hazard in Equity Partnerships: Evidence from Hollywood's Slate Financing Agreements," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 23(4), pages 811-838, December.
    11. Seulgi Yoo & Seonghoon Jeon, 2022. "The Effects of Vertical Integration in the Korea Movie Industry: Efficiency Versus Exclusion," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 61(3), pages 279-296, November.
    12. Joan Calzada & Tommaso M. Valletti, 2012. "Intertemporal Movie Distribution: Versioning When Customers Can Buy Both Versions," Marketing Science, INFORMS, vol. 31(4), pages 649-667, July.
    13. Gabriel Natividad, 2013. "Financial Slack, Strategy, and Competition in Movie Distribution," Organization Science, INFORMS, vol. 24(3), pages 846-864, June.
    14. Fernanda Gutierrez-Navratil & Victor Fernandez-Blanco & Luis Orea & Juan Prieto-Rodriguez, 2014. "How do your rivals’ releasing dates affect your box office?," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 38(1), pages 71-84, February.
    15. Dapeng Liu & Pascal Courty, 2022. "Some economics of movie exhibition: increasing returns and Imax revenue premium," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 46(4), pages 597-634, December.
    16. Jordi McKenzie & W. Walls, 2013. "Australian films at the Australian box office: performance, distribution, and subsidies," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 37(2), pages 247-269, May.
    17. Legoux, Renaud & Larocque, Denis & Laporte, Sandra & Belmati, Soraya & Boquet, Thomas, 2016. "The effect of critical reviews on exhibitors' decisions: Do reviews affect the survival of a movie on screen?," International Journal of Research in Marketing, Elsevier, vol. 33(2), pages 357-374.
    18. Wen-jhan Jane & Wei-peng Chen & Yuan-lin Hsu, 2015. "The impact of deregulation on the movie box office after Taiwan’s entry into the WTO: the difference-in-differences estimation," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 5(2), pages 289-308, December.
    19. Dalton, John T. & Leung, Tin Cheuk, 2017. "Strategic decision-making in Hollywood release gaps," Journal of International Economics, Elsevier, vol. 105(C), pages 10-21.
    20. Moez Hababou & Nawel Amrouche & Kamel Jedidi, 2016. "Measuring Economic Efficiency in the Motion Picture Industry: a Data Envelopment Analysis Approach," Customer Needs and Solutions, Springer;Institute for Sustainable Innovation and Growth (iSIG), vol. 3(3), pages 144-158, December.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:jemstr:v:22:y:2013:i:3:p:594-616. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.kellogg.northwestern.edu/research/journals/JEMS/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.