Diversification and the legal organization of the firm

• 成果类型: Article
• 署名作者: Bethel, JE; Liebeskind, JP
• 署名单位: Babson College; University of Southern California
• 刊物名称: ORGANIZATION SCIENCE
• ISSN/ISSBN: 1047-7039
• DOI: 10.1287/orsc.9.1.49
• 发表日期: 1998
• 页码: 49-67
• 关键词: Diversification; organization structure; subsidiary firms

摘要

The existing literature on the relationship between strategy and structure tends to ignore the legal dimension of the organization of diversified firms. Yet, there is considerable variation in the legal organization of diversified firms; while some of these firms are organized as simple corporations, many are organized as corporate groups in which certain lines of business are organized as separate, subsidiary firms. In this paper we argue that this variation in legal organization is observed because :Legal organization can significantly affect firm value. In particular, forming subsidiary firms to accommodate new businesses can protect the outstanding stakeholders of a diversified film from increases in bankruptcy risk and liability exposure. However, forming subsidiary firms also reduces economies of scope. Hence, there are offsetting costs and benefits to adopting different types of legal organization. Changes in these relative costs and benefits over time can also be expected to trigger changes in legal organization, as well as the divestiture of businesses characterized by particular types of economic hazards.