The Parenting Advantage model
VBM framework that describes how a parent company can
(help) create value. In their article, "From Corporate Strategy to
Parenting Advantage", Michael Goold and Andrew Campbell argue the
parent company should not only add value to a business unit, but add more
value than any other potential parent - they call this parenting advantage.
In their book: "Corporate-Level Strategy : Creating
Value in the Multibusiness Company" they mention four types of parental value creation:
Stand-alone influence – each subsidiary is viewed as a separate profit
centre. Using basic performance targets, the businesses are controlled and
monitored. Value creation is provided by making strategic decisions such
as the appointment of managers and approving major capital expenditures.
Linkage influence - value is created by improved co-operation and synergy
Central functions and services – corporate value is created through the
provision of administrative and managerial services to the businesses.
Corporate development – value creation through portfolio management.
Some authors have
claimed the role of the corporate center should be minimal (Hedley: The
overarching role of the corporate level is that of portfolio manager: to
manage the allocation of scarce financial resources over the business
units). Others have emphasized the importance of synergy (Prahalad & Hamal:
The corporate center should not be just another layer of accounting, but
must add value by enunciating the strategic architecture).
Which type of
influence is best to maximize value creation? The answer is complex
but depends and can
be determined upon the corporate purpose, history and culture and upon the reconciliation of
multiple paradoxes of parenting advantage (control versus empowerment,
responsiveness versus synergy, portfolio versus core competence).
Parenting Styles |
Resource-Based View |
Bricks and Clicks
More management models