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A Resource-Based Perspective on Business Strategies of Newly Founded Subsidiaries: The Case of German Pensionsfonds

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Diversification by firms into unfamiliar areas of business is achieved either by acquisition of an existing business in the destination industry or a greenfield start-up. This article focuses on the business strategy of greenfield start-ups. We theorize and find that firms entering a market by establishing a new subsidiary rely solely on their own preexisting internal resources, making it favorable to align the business strategy of the start-up with the firm's value-generating competencies. Our empirical results, which are based on a sample of German Pensionsfonds and their parent companies, are consistent with the view that the business strategy choice of a newly founded subsidiary is substantially directed by the internal resources and competencies of the parent firm.

Document Type: Research Article


Publication date: 2010-09-01

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