The Management Department
Department Seminar Series
Michael G. Jacobides
LBS
Friday, April 5th 2019
Room LE
CLUB at 10:00 am
Theme: “Scope
Transformation and Relatedness in U.S. Banking: Patterns and Performance Implications”
Abstract: Using a novel database of the
organizational structure of bank holding companies, this paper presents the first population-wide study of
the transformation in business scope in a sector, with particular focus on where banks expand.
We show that moving into new areas has a significantly
higher impact than diversifying
into existing areas, and that expanding scope hasa negative impact on average performance.
However, as financial intermediation has evolved over twenty-five years, a shifting set of
different activities became associated with “core banking”, with relatedness itself changing
over the banking sectors’ history. Banks that expand activity scope while staying close to
this evolving core have attained net performance benefits. We thus confirm the value of relatedness,
and document its evolutionary features and performance
impact.).
