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We highlight two mechanisms of limited attention for expert information intermediaries, i.e., analysts, and the effects of such limited attention on the market price discovery process. We approach analysts' limited attention from the perspective of day-to-day arrival of information and processing of tasks. We examine the attention-limiting role of competing tasks (number of earnings announcements and forecasts for portfolio firms) and distracting events (number of earnings announcements for non-portfolio firms) in analysts' forecast accuracy and the effects of such, on the subsequent price discovery process. Our results show that competing tasks worsen analysts' forecast accuracy, and competing task induced limited attention delays the market price adjustment process. On the other hand, distracting events can improve analysts' forecast accuracy and accelerate market price adjustments when such events relate to analysts' portfolio firms through industry memberships.

Lai, Li, Conover, and Wu (2010) propose a four-factor financial distress model to explain stock returns in the U.S. and Japanese markets. We examine this model in the stock markets of Australia, and six Asian markets (Hong Kong, Indonesia, Korea, Malaysia, Singapore, and Thailand). We find broad empirical support for the four-factor financial distress risk asset-pricing model in those markets. The four-factor financial distress asset pricing model improves explanatory power beyond the Fama–French (1993) three-factor asset pricing model in six of the seven Asian-Pacific markets (12 of 14 portfolio groupings), while the Carhart (1997) momentum-based asset pricing model only improves explanatory power beyond the Fama–French model in three of the seven markets (4 of 14 portfolio groupings).

We examine explicitly priced financial distress risk in post-1990 equity markets. We add a financial distress risk factor to Fama and French's (1993) three-factor model, based on Griffin and Lemmon's (2002) findings that financial distress is not fully captured by the book-to-market factor. We test three-factor and four-factor capital asset pricing models using both annual buy-and-hold analysis and monthly time series analysis across portfolios adjusted for common book-to-market, size, and financial distress factors. We find empirical support for an Ohlson (1980) O-score-based financial distress risk four-factor asset pricing model in the U.S. and Japanese markets.

This paper explores how two understudied characteristics of a firm's product portfolio, namely, aging of products and (non)innovativeness of products, affect firm survival. The influence of these product portfolio characteristics on organizational mortality can be observed both at the firm and at the industry levels. Paradoxically, the portfolio's influence at the firm and at the industry levels may go in opposite directions. Specifically, I predict that portfolios with aging products make their firms weaker competitors and survivors. However by weakening these firms, “aging” portfolios reduce competitive pressures at the industry level and, therefore, improve firm survival indirectly by changing industry vital rates. In contrast, firms with innovative product portfolios should be stronger survivors. At the same time, they are likely to intensify competition in the industry and, as a result, diminish survival chances of all firms, including those with innovative products. The analyses of all firms’ product portfolios in the worldwide optical disk drive industry, 1983–1999, support these predictions.

Portfolios of temporary organisations, particularly portfolios of R&D projects with different project partners, are a common yet understudied phenomenon. We know that these portfolios suffer from tensions inherent in project portfolio ambidexterity (e.g. portfolios balancing R&D projects with new and recurrent partners), yet our understanding of what might lessen these tensions remains limited. This study introduces the idea of project portfolio maturity and theorises how it can mitigate the negative effects of ambidextrous project portfolios. We test our hypotheses by combining proprietary survey and archival data on 136 R&D project portfolios in the German biotechnology industry covering project partnerships with both new and recurrent partners. Our results show that ambidextrous project portfolios hamper firm performance and that portfolio maturity mitigates these negative effects. By introducing a new perspective on project portfolios that accounts for overlooked temporal dimensions, this study provides a new contingency that has the potential to ease the tensions that result from projects with new and recurrent partners. We thereby add to the literatures on temporary organising, project portfolios, and ambidexterity.

Purpose – This chapter considers the question whether firms can contribute to poverty alleviation through engaging in ‘inclusive business’, thereby linking the macro concept of ‘inclusive growth’ to the micro concept of ‘inclusive business’. A key element in this approach is how to take so-called cross-sector partnerships into account. Partnerships are one way of bundling non-market resources in the internationalisation strategies of multinational enterprises (MNEs).

Design/methodology/approach – This chapter is largely exploratory and primarily aimed at validating a general taxonomy of inclusive business. The creation of a multi-level taxonomy of business models of MNEs towards inclusive business takes into account the role of cross-sector partnership portfolios. The taxonomy makes it possible to come to a first comparison of the strategies of MNEs across national and cultural boundaries, distinguish some patterns and discuss determinants of strategies in which partnerships play a role in the inclusive growth strategies of MNEs.

Findings – A first application of this taxonomy on the business and partnership models adopted by the first 100 Global Fortune companies shows that in general firms still adopt very reactive strategies when integrating inclusive business strategies in their cross-sector partnership portfolios.

Originality/value of chapter – This chapter takes a company-specific level of analysis for the relationship between Foreign Direct Investment and development, which is habitually researched at the macro level of analysis. It documents business models as well as the related cross-sector partnerships. Cross-sector partnership portfolios of companies are not yet researched at any systematic level. They form the meso-level link between micro-level business models and macro-level national development strategies.

To maintain and enhance innovation performance, many firms nowadays look for resources from external sources such as strategic alliances and regional network embeddedness. While considering the important interdependencies among different alliances, research has established an alliance portfolio perspective. From an alliance portfolio perspective, firms can consciously configure the dimensions of their alliance portfolios such as partner characteristics, relational properties, or structural properties. However, within the context of alliance portfolio configuration, the role of regional networks has been largely overlooked. As most high-tech firms are regionally clustered, this is an important research gap. In addressing this gap, this study explores the link between regional network density, alliance portfolio configuration, and its contribution to firm innovation performance. We examine how regional network density and alliance partner diversity influences firm level innovation output. We also investigate the moderating effect of overall network partner status and partner diversity on the link between regional network density and innovation performance. Our empirical evidence is derived from a longitudinal quantitative study of 1,233 German biotechnology firms. We find that regional network density and alliance partner diversity has an inverted U-shape effect on firm level innovation performance. However, overall network status as well as alliance partner diversity negatively moderates the link between regional network density and innovation output. Thus, our study contributes to a better understanding of the link between regional networks, alliance portfolio configuration, and firm level innovation performance.

With the disaggregation and fine-slicing of global value chains, offshoring and outsourcing has become increasingly relevant for many MNEs. The purpose of this chapter is to understand the value creation of the receiving partner of outsourcing activities. This is a firm that will have many outsourcing alliances with partners, and one perspective to frame these alliances is the alliance portfolio perspective. We ask – how can a firm on the receiving end of outsourcing create value through the management of its alliance portfolio?

Through a case study of a company supplying products to manufacturing industries, we investigate ways in which the company adds value for customers through different models of customer integration. Applying an alliance portfolio perspective, we study benefits of grouping alliances with customers and suppliers.

Whereas most studies of alliance portfolios have focused on value creation within a portfolio, we find that the mediating capability of coordinating between groups or portfolios of alliances is critical. We also see that the risk aspect is important for firms receiving outsourcing activities.

Our findings have implications for the strategy and organization of the mediating firm on the receiving end of outsourcing. We have only data from one firm, and therefore our findings need to be tested further.

Our findings have implications for managers organizing large alliance portfolios to include risk and mediation capabilities.

The chapter uses original in-depth data.

This study analyses the determinants of the value of a portfolio of real options and explores implications for strategic management. It focuses the analysis on four elements: the number of real options in the portfolio, constraints on the number of options that can be exercised, the volatility of underlying assets, and the correlation between underlying assets. These elements are articulated around a trade-off between growth options and switching options and are applied to different strategic situations of technological, market, and macroeconomic uncertainty.

This chapter presents a data envelopment analysis (DEA) based relative financial strength (RFS) indicator using accounting data that is predictive of stock market performance of public firms. Such an indicator is indispensable in the fundamental analysis of firms for stock portfolio selections. This methodology requires optimally configuring inputs and outputs for the DEA model such that the strength indicator is maximally correlated with observed stock returns. This optimized RFS indicator providing the maximum predictive strength of stock returns is determined by factors such as asset utilization, leverage, profitability, and growth rates, in addition to the well-known factor, book-to-market ratio. Computational evidence is provided using more than 800 firms covering all major sectors of the U.S. stock market. Using quarterly financial data, we employ the RFS indicator to devise portfolios that yield superior financial performance relative to using portfolios of sector-based funds.