Firms that sold off related units in which resource sharing was a possible source of economies of scope have been found to produce lower returns than those that sold off businesses unrelated to the firm's core businesses.

Question

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Firms that sell off related units lose the potential economies of scope that come from resource sharing, which can lead to lower returns. Keeping related units can allow for cost reduction and differentiation advantages.

Firms That Sold Off Related Units in Which Resource Sharing