The Competitive Implications of Intra-industry Diversification, the Firm-Investor Network, and Resource Acquisition Across the Firm Boundary: Evidence From The Hedge Fund Industry

The competitive implications of intra-industry diversification (chapter 2), the firm-investor network (chapter 3) and resource acquisition across the firm boundary (chapter 4) are of central concern to this thesis. The analysis draws on qualitative evidence, a quantitative, large-scale, longitudinal panel dataset (chapters 2 and 3), as well as conceptual reasoning (chapter 4). The empirical setting of the analysis is the hedge fund industry, which is characterised by small, entrepreneurial and knowledge-intensive firms. Whereas the three main chapters of this thesis are constructed and presented as stand-alone papers, three overarching insights emerge. First, intra-industry diversification impacts firm performance and firm survival in non-trivial ways. Whereas the positive effect of intraindustry diversification on survival seems to be driven by the risk reducing effect of beyond sub-sector diversification within an industry, the negative effect on performance seems to be driven by within sub-sector diversification, which may create limited value for investors. Second, the relationship of investment firms and their customers (i.e. investors) is much more multifaceted than the view of ‘investors as passive providers of capital’ would suggest. The analysis provides evidence for a performance and survival enhancing impact of the firminvestor network on the hedge fund firm. Third, moderation of complexity via a differential flow of resources is an important, yet underappreciated attribute of the firm boundary, which may contribute to the creation of resource asymmetries as a basis for competitive advantage. Although the evidence presented in this thesis is based on the empirical setting of the hedge fund industry, the findings on intra-industry diversification, the firm investor network and resource acquisition across the firm boundary may generalise to other firms in the (financial) services industry.

Name dc:type.qualificationname

phd

Level dc:type.qualificationlevel

doctoral

Grantor dc:publisher.institution

City, University of London

Year dc:date.issued

2014

Author dc:creator

• Kastl, E

• HG Finance