Opportunity Costs and Non-Scale Free Capabilities: Profit Maximization, Corporate Scope, and Profit Margins

摘要: The resource-based perspective on firm diversification, subsequent to Penrose (1959), has focused primarily the fungibility of resources across domains. We make a clear analytical distinction between scale-free capabilities and those that are subject opportunity costs must be allocated one use or another, thereby shifting discourse back Penrose’s original argument regarding stock organizational capabilities. existence alternative uses implies profit-maximizing diversification decisions should based upon cost their in domain another. This logic provides rational explanation for divergence total profits profit margins. Firms increase via when industries which they currently competing become relatively mature. Due spreading these more segments, we may observe firms' actions lead growth but lower average returns. model an empirical observations discount. self-selection effect noted recent work corporate finance not indicative inferior diversifying firms limited contexts operating.