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Internal Capital Market Controls and Financial Performance in Multidivisional Firms

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  • Hill, Charles W L
Abstract
It is proposed that, within the population of M-form firms, the control systems necessary to realize economic benefits from interrelationships between subunits o f a firm are incompatible with the systems necessary to realize benef its from an M-form type internal capital market. This hypothesis is t ested on 156 large U.K. firms. Questionnaire data are used to classif y the firms according to their internal control characteristics. The findings provide tentative support for the hypothesis. Copyright 1988 by Blackwell Publishing Ltd.

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  • Hill, Charles W L, 1988. "Internal Capital Market Controls and Financial Performance in Multidivisional Firms," Journal of Industrial Economics, Wiley Blackwell, vol. 37(1), pages 67-83, September.
    • Handle: RePEc:bla:jindec:v:37:y:1988:i:1:p:67-83
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    Cited by:

    1. Sebastian Goebel & Barbara Weißenberger, 2016. "The Dark Side of Tight Financial Control: Causes and Remedies of Dysfunctional Employee Behaviors," Schmalenbach Business Review, Springer;Schmalenbach-Gesellschaft, vol. 17(1), pages 69-101, April.
    2. Maria Guadalupe & Hongyi Li & Julie Wulf, 2014. "Who Lives in the C-Suite? Organizational Structure and the Division of Labor in Top Management," Management Science, INFORMS, vol. 60(4), pages 824-844, April.
    3. Figge, Frank & Hahn, Tobias & Barkemeyer, Ralf, 2014. "The If, How and Where of assessing sustainable resource use," Ecological Economics, Elsevier, vol. 105(C), pages 274-283.
    4. Krane, Ronja & Eulerich, Marc, 2020. "Going global: Factors influencing the internationalization of the internal audit function," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 41(C).
    5. Lee, Ji-Hwan & Gaur, Ajai S., 2013. "Managing multi-business firms: A comparison between Korean chaebols and diversified U.S. firms," Journal of World Business, Elsevier, vol. 48(4), pages 443-454.
    6. MIYAJIMA Hideaki & OGAWA Ryo & USHIJIMA Tatsuo, 2017. "Are Smaller (Larger) Corporate Headquarters Better?," Discussion papers 17004, Research Institute of Economy, Trade and Industry (RIETI).
    7. Ben Kedia & Debmalya Mukherjee & Somnath Lahiri, 2006. "Indian business groups: Evolution and transformation," Asia Pacific Journal of Management, Springer, vol. 23(4), pages 559-577, December.
    8. Canales, J. Ignacio & Caldart, Adrián, 2017. "Encouraging emergence of cross-business strategic initiatives," European Management Journal, Elsevier, vol. 35(3), pages 300-313.
    9. Felipe Balmaceda, 2002. "Corporate Diversification: Good for Some Bad for Others," Documentos de Trabajo 141, Centro de Economía Aplicada, Universidad de Chile.
    10. Saptarshi Purkayastha, 2013. "Diversification Strategy and Firm Performance: Evidence from Indian Manufacturing Firms," Global Business Review, International Management Institute, vol. 14(1), pages 1-23, February.
    11. Mingfang Li & Kannan Ramaswamy & Barbara Pécherot Petitt, 2006. "Business groups and market failures: A focus on vertical and horizontal strategies," Asia Pacific Journal of Management, Springer, vol. 23(4), pages 439-452, December.
    12. Amess, Kevin & Stiebale, Joel & Wright, Mike, 2016. "The impact of private equity on firms׳ patenting activity," European Economic Review, Elsevier, vol. 86(C), pages 147-160.
    13. Russell W. Coff, 1999. "How Buyers Cope with Uncertainty when Acquiring Firms in Knowledge-Intensive Industries: Caveat Emptor," Organization Science, INFORMS, vol. 10(2), pages 144-161, April.
    14. Fernández, Zulima, 1996. "Expatriate compesation and its link to subsidiary strategic role : a theoretical analysis," DEE - Working Papers. Business Economics. WB 6017, Universidad Carlos III de Madrid. Departamento de Economía de la Empresa.
    15. Mathias Arrfelt & Robert M. Wiseman & Gerry McNamara & G. Tomas M. Hult, 2015. "Examining a key corporate role: The influence of capital allocation competency on business unit performance," Strategic Management Journal, Wiley Blackwell, vol. 36(7), pages 1017-1034, July.
    16. Caldart, Adrian A. & Ricart, Joan E., 2006. "A formal evaluation of the performance of different corporate styles in stable and turbulent environments," IESE Research Papers D/621, IESE Business School.
    17. Argyres, Nicholas S., 1995. "Technology strategy, governance structure and interdivisional coordination," Journal of Economic Behavior & Organization, Elsevier, vol. 28(3), pages 337-358, December.
    18. Yeheskel, Orly & Zeira, Yoram & Shenkar, Oded & Newburry, William, 2001. "Parent company dissimilarity and equity international joint venture effectiveness," Journal of International Management, Elsevier, vol. 7(2), pages 81-104.
    19. Amess, Kevin & Stiebale, Joel & Wright, Mike, 2015. "The impact of private equity on firms' innovation activity," DICE Discussion Papers 184, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    20. Van der Stede, Wim A., 2000. "The relationship between two consequences of budgetary controls: budgetary slack creation and managerial short-term orientation," Accounting, Organizations and Society, Elsevier, vol. 25(6), pages 609-622, August.
    21. Sanjeev Dewan & Steven C. Michael & Chung-ki Min, 1998. "Firm Characteristics and Investments in Information Technology: Scale and Scope Effects," Information Systems Research, INFORMS, vol. 9(3), pages 219-232, September.
    22. Villasalero, Manuel, 2017. "A resource-based analysis of realized knowledge relatedness in diversified firms," Journal of Business Research, Elsevier, vol. 71(C), pages 114-124.
    23. Daphne W. Yiu & Yuan Lu & Garry D. Bruton & Robert E. Hoskisson, 2007. "Business Groups: An Integrated Model to Focus Future Research," Journal of Management Studies, Wiley Blackwell, vol. 44(8), pages 1551-1579, December.

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