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Scope, Scale and Concentration: The 21st Century Firm

Author

Listed:
  • Gerard Hoberg
  • Gordon M. Phillips

Abstract

We provide evidence that over the past 30 years, U.S. firms have expanded their scope of operations. Increases in scope and scale were achieved largely without increasing traditional operating segments. Scope expansion significantly increases valuation and is primarily realized through acquisitions and investment in R&D, but not through capital expenditures. We show that traditional concentration ratios do not capture this expansion of scope. Our findings point to a new type of firm that increases scope through related expansion, which is highly valued by the market.

Suggested Citation

  • Gerard Hoberg & Gordon M. Phillips, 2022. "Scope, Scale and Concentration: The 21st Century Firm," NBER Working Papers 30672, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:30672
    Note: CF
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    Cited by:

    1. Xiang Ding, 2023. "Industry Linkages from Joint Production," Working Papers 23-02, Center for Economic Studies, U.S. Census Bureau.
    2. Damásio, Bruno & Mendonça, Sandro & Silva, Eduardo, 2023. "Developing science and technology – the role of Big Tech," 32nd European Regional ITS Conference, Madrid 2023: Realising the digital decade in the European Union – Easier said than done? 277951, International Telecommunications Society (ITS).

    More about this item

    JEL classification:

    • D20 - Microeconomics - - Production and Organizations - - - General
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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