Transformation of corporate scope in US banks: patterns and performance implications

Subject

Strategy and Entrepreneurship

Publishing details

Social Sciences Research Network

Authors / Editors

Cetorelli N; Jacobides M G; Stern S

Biographies

Publication Year

2017

Abstract

Using a novel database containing the time-series details of the organizational structure of individual bank holding companies, this paper presents the first population-wide study of the transformation in business scope of U.S. banks. Expanding scope has a negative impact on performance on average. However, we find that firms whose expansion keeps them closer to the prevailing “modal bank” are better off compared with those pursuing generic diversification. Moreover, we find that early expanders into particular activities benefit more, whereas late adopters, rather than benefitting by “fitting the norm,” lose out.

Keywords

Business scope; Performance; Diversification

Series Number

813

Series

Social Sciences Research Network