We found a match
Your institution may have access to this item. Find your institution then sign in to continue.
- Title
What constrains firms from divesting their legacy business?
- Authors
Ding, Yang
- Abstract
This study focuses on a unique business phenomenon, legacy divestitures, which refers to the sale or spinoff of a firm's original business. I argue that firms may be prevented from engaging in legacy divestiture by organizational inertia, which become increasingly stronger as the legacy business gets older. I also examine factors that help firms overcome the constraints of inertial forces on firms' legacy divestitures. Hypotheses are tested using a sample of 108 diversified American companies, 27 of which divested legacy businesses between 1980 and 2017. Firms are less likely to divest their legacy businesses as the legacy units get older. The negative relationship is weakened by two factors, performance–aspiration gaps and R&D intensity.
- Subjects
BUSINESS planning; BUSINESS enterprises; ORGANIZATIONAL change; VOCATIONAL interests
- Publication
Canadian Journal of Administrative Sciences (John Wiley & Sons, Inc.), 2023, Vol 40, Issue 1, p83
- ISSN
0825-0383
- Publication type
Article
- DOI
10.1002/cjas.1684