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Business relatedness measurements: state-of-the-art and a proposal
Växjö University, Faculty of Humanities and Social Sciences, School of Management and Economics. (International strategy)ORCID iD: 0000-0003-0455-0643
2006 (English)In: European Business Review, ISSN 0955-534x, Vol. 18, no 5, p. 350-363Article in journal (Refereed) Published
Abstract [en]

The purpose of this article is to extend our understanding of business relatedness, a concept that is central to diversification issues. These questions are put forward: What characterizes existing types of measurements of business relatedness? What are the weaknesses of these types? What would be the features of a model for measurement of business relatedness?

As relatedness concerns specific business attributes, common attributes used in measurements are presented. A review of previous studies on types of measurements of business relatedness (codes or indices, researcher assessments and managerial perceptions) is followed by a discussion on correlations between perceptual and objective measurements.

The review shows that application of SIC codes/ and researcher assessments suffer from weak content validity of the measurements, and underestimation of the multidimensionality of the construct. Use of managerial perceptions needs to address the uncertainty inherent in managerial self-assessments; previous research has found a major divergence between perceptual and objective measurements.

A model is proposed for the measurement of business relatedness using perceptual data. It is stressed that the context of the comparisons (i.e., reason for comparison and units to be compared) has a major influence on the outcomes. Business attributes to be subjectively compared by managers are those that have been singled out as important for financial performance.

Place, publisher, year, edition, pages
Emerald Group Publishing Ltd , 2006. Vol. 18, no 5, p. 350-363
Keywords [en]
Business relatedness, measurements, objective measurements, subjective measurements
National Category
Business Administration
Research subject
Economy, Marketing
Identifiers
URN: urn:nbn:se:vxu:diva-3409DOI: 10.1108/09555340610686949OAI: oai:DiVA.org:vxu-3409DiVA, id: diva2:203365
Available from: 2007-02-15 Created: 2007-02-15 Last updated: 2018-05-17Bibliographically approved

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Pehrsson, Anders

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CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • harvard1
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf