Diversification based on resource characteristics: more or less fungible and scale-free скачать в хорошем качестве

Diversification based on resource characteristics: more or less fungible and scale-free

Whether or not a resource is scale-free is critical for shaping diversification decisions. Scale-free resources, which do not need to be allocated, place no limits on the theoretical scope of a company. It is the non-scale-free resources, which must be allocated and have an opportunity cost, that determine whether diversification makes sense. Expanding the scope of the company only makes sense if those non-scale-free resources can be reallocated to a new domain in order to achieve a higher return. Fungibility shapes where to diversify, as both scale-free and redeployable resources may be more useful in some new businesses than others. According to one definition, “fungible refers to something that cannot be distinguished from another thing, it is interchangeable, substitutable or uniform.” As used in the Levinthal and Wu (2010) reading, fungibility refers to “the range of activities over which a resource or capability may be applied.” If something is highly fungible, it is broadly useful. The second key concept from the Levinthal and Wu (2010) reading on opportunity costs and non-scale free capabilities, is how scale-free or non-scale-free a resource is. Non-scale-free resources must be allocated — this means that there is an opportunity cost in using them. Using a non-scale-free resource for one purpose precludes its simultaneous use for another. 0:00 Welcome 2:01 Resources can be more or less scale-free 2:34 Resources can be more or less fungible 4:08 Examples of more or less scale-free/fungible resources 9:37 Summary and conclusion You can read more about these concepts at https://medium.com/@boysenandrew/hori... (friends link - it won't count against your Medium article limit if you have a free account). I'm still learning how to do these, and I know I had a lot of technical issues in this one, so any feedback or suggestions are welcome. The source for this way of thinking about the nature of resources, and how that affects diversification decisions, is: Levinthal, D. A. and Wu, B. (2010). Opportunity costs and non‐scale free capabilities: Profit maximization, corporate scope, and profit margins. Strategic Management Journal, 31: 780–801.