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- catalog abstract "The relationship between diversification and strategic risk taking behavior, measured as horizontal expansion in a turbulent environment, is explored through interviews with senior executives in eighteen cable television companies. The interviews reveal three mechanisms through which diversification discouraged risk taking behavior. First, due to information processing constraints, corporate executives in companies engaged in unrelated diversification had lessknowledge of cable industry dynamics than their counterparts in focused firms, and consequently perceived a greater level of competitive risk. Second, consistent with a hypothesis that performance evaluation and reward systems in diversified companies encourage conservative behavior by risk averse division managers, cable division managers almost never championed aggressive expansion programs; when diversified companies undertook such programs, they invariably were initiated by the corporate office. Third, institutional survival was viewed as a paramount priority in most of the sample companies, but this had different implications for risk taking in focused and diversified firms. In focused firms, a desire to perpetuate the institution reduced the likelihood that the company would be sold. In diversified companies, only older segments in the portfolio were considered to be part of the "institutional core." Newer additions like cable were viewed more as financial investments, and thus were subject to divestiture. The availability of an internal capital market encouraged risk taking behavior in some diversified com".
- catalog contributor b10889920.
- catalog contributor b10889921.
- catalog created "c1998.".
- catalog date "1998".
- catalog date "c1998.".
- catalog dateCopyrighted "c1998.".
- catalog description "Includes bibliographical references (p. 34-36).".
- catalog description "The relationship between diversification and strategic risk taking behavior, measured as horizontal expansion in a turbulent environment, is explored through interviews with senior executives in eighteen cable television companies. The interviews reveal three mechanisms through which diversification discouraged risk taking behavior. First, due to information processing constraints, corporate executives in companies engaged in unrelated diversification had lessknowledge of cable industry dynamics than their counterparts in focused firms, and consequently perceived a greater level of competitive risk. Second, consistent with a hypothesis that performance evaluation and reward systems in diversified companies encourage conservative behavior by risk averse division managers, cable division managers almost never championed aggressive expansion programs; when diversified companies undertook such programs, they invariably were initiated by the corporate office. Third, institutional survival was viewed as a paramount priority in most of the sample companies, but this had different implications for risk taking in focused and diversified firms. In focused firms, a desire to perpetuate the institution reduced the likelihood that the company would be sold. In diversified companies, only older segments in the portfolio were considered to be part of the "institutional core." Newer additions like cable were viewed more as financial investments, and thus were subject to divestiture. The availability of an internal capital market encouraged risk taking behavior in some diversified com".
- catalog extent "41 p. ;".
- catalog isPartOf "Working paper (Harvard University. Graduate School of Business Administration. Division of Research) ; 99-003.".
- catalog isPartOf "Working paper / Division of Research, Harvard Business School ; 99-003".
- catalog issued "1998".
- catalog issued "c1998.".
- catalog language "eng".
- catalog publisher "[Boston] : Division of Research, Harvard Business School,".
- catalog title "Diversification and risk taking in the U.S. cable television industry / Thomas R. Eisenmann.".
- catalog type "text".