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Research seminar with Professor Harry Bowen
March 18, 2013 @ 2:00 pm - 3:00 pm
“Value Chain Relatedness: Strategic Complementarities and Firm Performance”
This presentation examines the literature on relatedness and firm performance in connection to customer side as well as technological side relatedness. Recent studies indicate the importance of each source of relatedness but yield ambiguous findings regarding their impacts on performance. Conjecturing this ambiguity, we develop a secondary data method to measure technological and customer relatedness for a large sample of U.S. firms from 1984 to 2004. Estimating a model in which relatedness and firm performance are simultaneously determined, we find that, unlike prior studies, each source of relatedness has a positive direct effect on firm performance and a positive indirect effect that reflects complementarity between each source of relatedness.