Comments on 'Diversification strategy and the roles of the centre
(Aswin van Oijen, Sytse Douma. Long Range Planning, Volume 26, Issue 5, October 1993, Pages 80-92)
The corporate centre can perform many roles for its business units. Choosing the correct role or roles is essential for firm performance. The wrong choices could, for instance, lead to excessive overhead costs or undermine entrepreneurship in the business units. The right choices could result in a whole that is worth more than the sum of its parts. In this article, we argue that a firm's corporate strategy influences the choices for the roles. We propose certain links between the diversification strategy and the roles the corporate centre performs. Our subsequent empirical study of Dutch firms reveals some striking differences between high-performing and low-performing firms. In general, the high performers have a better fit between their diversification strategy and their corporate centre roles than do the low performers.