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Knowledge Relatedness and the Performance of Multibusiness Firms

Strategic Management Journal, Forthcoming

Posted: 4 Jan 2005  

Hüseyin Tanriverdi

University of Texas at Austin - Red McCombs School of Business

N. Venkat Venkatraman

Boston University - Department of Management Information Systems

Abstract

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

Suggested Citation

Tanriverdi, Hüseyin and Venkatraman, N. Venkat, Knowledge Relatedness and the Performance of Multibusiness Firms. Strategic Management Journal, Forthcoming. Available at SSRN: https://ssrn.com/abstract=576481

Huseyin Tanriverdi (Contact Author)

University of Texas at Austin - Red McCombs School of Business ( email )

Austin, TX 78712
United States

N. Venkat Venkatraman

Boston University - Department of Management Information Systems ( email )

595 Commonwealth Avenue
Boston, MA 02215
United States

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