Strategy beyond the business unit level: corporate parenting in focus

Abstract

Purpose

The gap between management theory and practice has been much criticized. To help bridge the divide, a synthesis of empirical, theoretical and practice literature is offered, along with an application of the widely used VRIO framework, to contend that developing a focused corporate parenting approach as a core competence serves as a source of competitive advantage for diversified companies.

Design/methodology/approach

A synthesis of empirical, theoretical and practice literature is presented, beginning with a discussion of why and how firms diversify; the relative performance of firms that pursue related and unrelated diversification; an application of the resource-based view, core competencies and the VRIO framework; a description of focused corporate parenting as a core competency; a prescription for how diversified firms can implement a focused corporate parenting approach; and implications for research.

Findings

Developing a focused corporate parenting approach as a core competence serves as a source of competitive advantage for diversified companies.

Research limitations/implications

The synthesis of empirical, theoretical and practice literature presented provides a foundation for future research into the impact of focused corporate parenting on diversified firm performance.

Practical implications

The paper includes a prescription for how diversified firms can implement a focused corporate parenting approach.

Originality/value

The application of the resource-based view and core competency theories to corporate parenting provides managers with the rationale for and methodology to focus their corporate parenting activities.

Citation

Galpin, T. (2019), "Strategy beyond the business unit level: corporate parenting in focus", Journal of Business Strategy, Vol. 40 No. 3, pp. 43-51. https://doi.org/10.1108/JBS-01-2018-0011