Emilie Feldman, Management, The Wharton School
Abstract: This project considers whether and how corporate headquarters either add value to or destroy value for the subsidiaries operating under their oversight. This question is a foundational one in the field of strategic management and has been debated for several decades. However, researchers have been limited from fully answering it due to the confounding influence of non-random selection in the companies that choose to have corporate headquarters in place or not, as well as a lack of usable data on the characteristics of subsidiaries that do and do not operate under corporate headquarters. Using a novel dataset in the electric utility industry, this project will exploit regulatorily-driven and therefore exogenous variation in the companies that do and do not have corporate headquarters in place, as well as mandated disclosure regulations, to address these exact questions. The findings generated by this project have the potential to address several of the Mack Institute’s research priorities, specifically surrounding the ways in which different corporate structures can facilitate or hinder innovation in operating subsidiaries, how multi-business companies can become leaders rather than laggards at innovation, and how these firms can maximize the value that they are able to capture from those innovation investments.