You are not currently logged in.
Access JSTOR through your library or other institution:
Direct Estimation of Synergy: A New Approach to the Diversity-Performance Debate
Rachel Davis and L. G. Thomas
Vol. 39, No. 11 (Nov., 1993), pp. 1334-1346
Published by: INFORMS
Stable URL: http://www.jstor.org/stable/2633029
Page Count: 13
You can always find the topics here!Topics: Corporate synergy, Drug synergy, Pharmaceutical industry, Pharmaceutical preparations, Business structures, Chemicals, Industrial management, Marketing, Coefficients, Corporate strategies
Were these topics helpful?See somethings inaccurate? Let us know!
Select the topics that are inaccurate.
Preview not available
This study examines the linkages between relatedness and synergy in the context of diversification among U.S. pharmaceutical firms for the period 1960-1980. Rather than assume (as in the entropy, Herfindahl and concentric indices of diversification) that the levels of synergy generated by different related combinations of business units are identical, we estimate synergy directly using a modified version of the concentric index. In addition to estimating synergy using capital market performance of the firm as a whole, we examine the effects of nondrug diversification on the innovative productivity of firms' pharmaceutical divisions alone. Our two main findings are that production relatedness, such as that between drugs and chemicals, in fact did not imply synergy over the period of our study; and that the patterns of synergy for different types of relatedness shifted over time with the industry life cycle.
Management Science © 1993 INFORMS