Corporate diversification and organizational structure: A resource-based view

We argue that related diversification enhances performance only when it allows a business to obtain preferential access to strategic assets-those that are valuable, rare, imperfectly tradable, and costly to imitate. As the advantage this access affords will decay as a result of asset erosion and imitation by single business rivals, in the long run only competences that enable a firm to build new strategic assets more quickly and efficiently than competitors will allow it to sustain supernormal profits. Both short- and long-run advantages are conditional, however, on organizational structures that allow the firm's divisions to share existing strategic assets and to transfer the competence to build new ones efficiently.