Knowledge Relatedness and the Performance of Multibusiness Firms
University of Texas at Austin - Red McCombs School of Business
N. Venkat Venkatraman
Boston University - Department of Management Information Systems
Strategic Management Journal, Forthcoming
This study examines the relationship between "knowledge relatedness" and performance of multibusiness firms. It defines knowledge relatedness as the extent to which a multibusiness firm uses common knowledge resources across its business units. It argues that cross-business knowledge synergies arising from knowledge relatedness are likely to improve firm performance. The study construes knowledge relatedness in terms of three complementary dimensions: (1) product knowledge relatedness, (2) customer knowledge relatedness, and (3) managerial knowledge relatedness. In a sample of 303 Fortune1000 firms, the study finds that the individual dimensions of knowledge relatedness do not have significant effects on firm performance on their own. The joint effect of the three types of knowledge relatedness on firm performance is positive and significant. Implications for research and practice are discussed.
Keywords: corporate diversification strategy, knowledge relatedness, synergy, relatedness, complementarity; survey, structural equation modeling, second-order construct, performance
Date posted: January 4, 2005