Capital Structure, Product Market Dynamics, and the Boundaries of the Firm

• 成果类型: Article
• 署名作者: Hackbarth, Dirk; Mathews, Richmond; Robinson, David
• 署名单位: Boston University; University System of Maryland; University of Maryland College Park; Duke University
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2014.2008
• 发表日期: 2014
• 页码: 2971-2993
• 关键词: capital structure; Corporate investment; Organizational design; Real options

摘要

We model a new product market opportunity as an option and ask whether it is best exploited by a large incumbent firm (integration) or by a small separate firm (nonintegration). Starting from a standard framework, in which value-maximizing investment and financing decisions are jointly determined, we show that integration protects assets in place value, whereas nonintegration protects option value and maximizes financial flexibility. We show that increases in standard measures of cash flow risk predict exploitation of new opportunities by specialized firms, whereas increases in product market competition (e. g., the risk of competitive preemption) predict exploitation by incumbents. We also show that alliances organized as licensing agreements or revenue-sharing contracts sometimes better balance the sources of value and thus may dominate more traditional forms of organization. These organizational equilibria arise from the dynamic interaction of the new opportunity's option-like features with realistic competitive forces.