Capturing Relatedness: Comprehensive Measures Based on Secondary Data

British Journal of Management, Forthcoming

39 Pages Posted: 4 Jun 2015  

Elisabeth Nocker

University of Innsbruck

Harry P. Bowen

Queens University of Charlotte

Christian Stadler

University of Warwick - Warwick Business School

Kurt Matzler

University of Innsbruck

Multiple version iconThere are 2 versions of this paper

Date Written: June 3, 2015

Abstract

In this article we present new measures of technological and customer side relatedness constructed from widely available secondary data. Relatedness is a concept central to predicting the existence and nature of a relationship between corporate diversification and firm performance. Yet, finding appropriate measures has been an ongoing struggle. The widely used SIC-based entropy measure has low construct validity, and survey based measures are hard to replicate across firms and industries and over time. The measures we develop significantly outperform established measures in explaining variation in firm performance across firms and over time, and both sources of relatedness are found to be independent and significant explanations of firm performance.

Keywords: Diversification, Relatedness, Economies of Scope

JEL Classification: C81, D23, G11

Suggested Citation

Nocker, Elisabeth and Bowen, Harry P. and Stadler, Christian and Matzler, Kurt, Capturing Relatedness: Comprehensive Measures Based on Secondary Data (June 3, 2015). British Journal of Management, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2614059

Elisabeth Nocker

University of Innsbruck ( email )

Universitätsstraße 15
Innsbruck, Innsbruck 6020
Austria

Harry P. Bowen

Queens University of Charlotte ( email )

1900 Selwyn Avenue
Charlotte, NC NC 28207
United States
+1 704 688 2707 (Phone)

HOME PAGE: http://www.queens.edu/Academics-and-Schools/Schools-and-Colleges/McColl-School-of-Business/

Christian Stadler (Contact Author)

University of Warwick - Warwick Business School ( email )

Coventry CV4 7AL
United Kingdom

HOME PAGE: http://www.wbs.ac.uk/about/person/christian-stadler/

Kurt Matzler

University of Innsbruck ( email )

Universitätsstraße 15
Innsbruck, Innsbruck 6020
Austria

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