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Please use this identifier to cite or link to this item: http://hdl.handle.net/2451/31398

Title: Spread Too Thin: Uncertainty Shocks and Diseconomies of Scope
Authors: Natividad, Gabriel
Sorenson, Olav
Issue Date: 20-Dec-2011
Series/Report no.: NET Institute Working Papers;11_04
Abstract: Although many streams of literature have recognized that firms with broader scope often underperform those with greater focus, relatively little research has examined the mechanisms that might account for these diseconomies of scope. One potential mechanism is that uncertainty shocks |events or short-term periods that upset the normal course of business| place unusual demands on the limited attention of managers. When managers of larger, more diverse rms allocate their time and organizational resources to address these events, they necessarily divert attention and resources away from other businesses, thereby converting these uncertainty shocks in one part of the organization to performance shocks in other parts of it. An empirical examination of the relationship between the distribution of lms in theaters and videos for sale demonstrates that uncertainty shocks in theatrical distribution become performance shocks in the video market and that the magnitude of these eects increases for larger, more diversied rms.
URI: http://hdl.handle.net/2451/31398
Appears in Collections:NET Institute Working Papers Series

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