Core Abilities and Divestitures

64 Pages Posted: 1 Nov 2014 Last revised: 14 Oct 2016

See all articles by Demian Berchtold

Demian Berchtold

University of Bern; Ecole hôtelière de Lausanne

Claudio F. Loderer

University of Berne - Institute for Financial Management; European Corporate Governance Institute (ECGI)

Urs Waelchli

Rochester-Bern Executive Programs; University of Rochester - Simon Business School

Date Written: October 4, 2016


Over time, firms increasingly focus on their core competences. This evolution impairs their ability to manage noncore assets, which they should therefore divest. We test this prediction and find consistent evidence. Moreover, mature firms divest more in response to exogenous technology shocks. These results are induced by structural and process rigidities that firms accumulate over time to better exploit their core competences. Rather than reinvesting, mature divesting firms return money to investors. Finally, the market reaction to divestitures by older firms is positive and positively related to rigidities. These findings contribute to a better understanding of the corporate lifecycle.

Keywords: divestitures, corporate lifecycle, firm age, core competences, rigidities, technology shocks

JEL Classification: G30; L20

Suggested Citation

Berchtold, Demian Simon and Loderer, Claudio F. and Waelchli, Urs, Core Abilities and Divestitures (October 4, 2016). Available at SSRN: or

Demian Simon Berchtold

University of Bern ( email )

Gesellschaftsstrasse 49
Bern, BERN 3001

Ecole hôtelière de Lausanne ( email )

Route de Cojonnex 18
Lausanne, 1000

Claudio F. Loderer

University of Berne - Institute for Financial Management ( email )

Engehaldenstrasse 4
Bern, CH-3012
+41 31 631 37 75 (Phone)
+41 31 631 84 21 (Fax)

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels


Urs Waelchli (Contact Author)

Rochester-Bern Executive Programs ( email )

Engehaldenstrasse 4
Bern, 3012

University of Rochester - Simon Business School ( email )

Rochester, NY 14627
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
PlumX Metrics