Synergies Theory

CROSS-BUSINESS SYNERGY: SOURCES, PROCESSES AND THE CAPTURE OF unified VALUE

JEFFREY A. MARTIN The University of Texas at Austin McCombs shoal of Business Department of Management 1 University Station B6300 Austin, Texas 78712-0210 Tel: (512) 232-4750 telecommunicate: (512) 471-3937 Email: jeffrey.martin@bus.utexas.edu

KATHLEEN M. EISENHARDT Department of Management Science and Engineering Stanford University 342 Terman Stanford, atomic number 20 94305 Tel: (650) 723-1887 Fax: (650) 723-8799 Email: kme@stanford.edu

June 11, 2002

An earlier version of this paper appears in the 2001 Academy of Management Best Paper Proceedings nether the title Exploring Cross-Business synergies.

The authors wish to thank Constance Helfat, Anil Gupta, Frances Fabian and Filipe Santos for their comments on earlier drafts of this manuscript. Research for this paper was supported by the Stanford technology Ventures Program and the Kauffman Center for Entrepreneurial Leadership.

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CROSS-BUSINESS SYNERGY: SOURCES, PROCESSES AND THE CAPTURE OF CORPORATE VALUE

The pursuit of synergy is at the heart of corporate schema in the multi-business firm.



Indeed, the promise of synergy is one of the key rationales for the humanity of multi-business firms, as well as a primary origin for strategic moves like acquisitions, diversification and alliances. However, despite the enormous forethought that management focuses on different means to achieve cross-business synergies, the acknowledgment of cross-business synergies remains an elusive goal for many organizations. Moreover, as the footprint of change increases, difficulties in realizing cross-business synergies become even more cunning as the sources of synergies within corporations may frequently change. Observations from the literature argon that: 1) cross-business synergies exist; 2) the three major sources of synergies are economies of scope, market power, and versed governance advantages; 3) the realization of potential synergies depends on the...If you want to put a full essay, order it on our website: Orderessay



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