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A General Interindustry Relatedness Index

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  • David J. Bryce

    ()
    (Marriott School, Brigham Young University, Provo, Utah 84602)

  • Sidney G. Winter

    ()
    (The Wharton School, University of Pennsylvania, Philadelphia, Pennsylvania 19104; and Australian School of Business, University of New South Wales, Sydney, NSW 2052, Australia)

Abstract

For empirical work in the resource-based view of the firm, characterizing the resources that are responsible for firm growth is difficult because valuable resources are often tacit, ambiguous, or difficult to identify. This is a particular problem for empirical assessments that rely upon the concept of relatedness between resources to characterize the direction of growth of the firm. We tackle the problem for the general case by developing a general interindustry relatedness index. The index harnesses the relatedness information embedded in the multiproduct organization decisions of every diversified firm in the U.S. manufacturing economy. The index is general in that it can be used across industry contexts without requiring explicit identification of resources and it provides a percentile relatedness rank for every possible pair of four-digit Standard Industrial Classification manufacturing industries. The general index is tested for predictive validity and found to perform as expected. Applications of the index in strategy research are suggested.

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File URL: http://dx.doi.org/10.1287/mnsc.1090.1040
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Bibliographic Info

Article provided by INFORMS in its journal Management Science.

Volume (Year): 55 (2009)
Issue (Month): 9 (September)
Pages: 1570-1585

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Handle: RePEc:inm:ormnsc:v:55:y:2009:i:9:p:1570-1585

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Related research

Keywords: relatedness; resource-based view; corporate strategy;

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References

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Cited by:
  1. Nikulainen, Tuomo & Pajarinen, Mika, 2013. "Industry restructuring in the ICT sector – What does labor mobility tell us about skill relatedness and knowledge spillovers?," ETLA Working Papers, The Research Institute of the Finnish Economy 17, The Research Institute of the Finnish Economy.
  2. Giulio Cainelli & Donato Iacobucci, 2010. "Agglomeration, related variety and vertical integration," Working Papers 1005, c.MET-05 - Centro interuniversitario di Economia Applicata alle Politiche per L'industria, lo Sviluppo locale e l'Internazionalizzazione.
  3. Frank Neffke & Martin Henning, 2011. "Entrepreneurship Diversification, Skill Relatedness and Regional Economic Evolution," ERSA conference papers ersa10p937, European Regional Science Association.
  4. Francisco Rebelo & Ester Gomes da Silva, 2013. "Export variety, technological content and economic performance: The case of Portugal," FEP Working Papers 491, Universidade do Porto, Faculdade de Economia do Porto.
  5. Huo, Dong & Motohashi, Kazuyuki, 2013. "When Category-based Indices Encounter Non-independent Categories: Solving the Taxonomy Issue in Resource-based Empirical Studies," MPRA Paper 56186, University Library of Munich, Germany.
  6. Frank Neffke & Martin Svensson Henning, 2009. "Skill-relatedness and firm diversification," Papers on Economics and Evolution 2009-06, Philipps University Marburg, Department of Geography, revised Oct 2010.
  7. Bustos, Sebastián & Gomez, Charles & Hausmann, Ricardo & Hidalgo, César A., 2012. "The Dynamics of Nestedness Predicts the Evolution of Industrial Ecosystems," Scholarly Articles 8832358, Harvard Kennedy School of Government.
  8. Alessia LO TURCO & Daniela MAGGIONI, 2014. "On firms' product space evolution: the role of firm and local product relatedness," Working Papers 402, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
  9. Peng, Mike W. & Lee, Seung-Hyun & Hong, Sungjin J., 2014. "Entrepreneurs as intermediaries," Journal of World Business, Elsevier, vol. 49(1), pages 21-31.
  10. Qian Cher Li & Andrea Mina & Bruce S. Tether & Karl Wennberg, 2011. "Diversification and Human Capital as Antecedents of Internationalization amongst Professional Service Firms: A Study of UK Based Engineering Consultants," DRUID Working Papers 11-15, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.

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