Parenting Advantage
(Goold, Campbell)

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How can a parent company (help) create value? Explanation of Parenting Advantage of Goold and Campbell.

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  1. Summary
  2. Forum
  3. Best Practices
  4. Expert Tips
  5. Resources
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What is Parenting Advantage? Description

The Parenting Advantage model is a framework that describes how a parent company can (help) create value. In their article, "From Corporate Strategy to Parenting Advantage", Michael Goold and Andrew Campbell argue that the parent company should not only add value to a business unit, but add more value than any other potential parent - they call this: "Parenting Advantage". In their book: "Corporate-Level Strategy: Creating Value in the Multibusiness Company", they mention four types of parental value creation:


Four types of parental value creation

  1. Stand-alone influence. Each subsidiary is viewed as a separate profit center. Using basic performance targets, the businesses are controlled and monitored. Value creation is provided by making strategic decisions such as the appointment of managers and approving major capital expenditures.

  2. Linkage influence. Value is created by improved co-operation and synergy benefits.

  3. Central functions and services. Corporate value is created through the provision of administrative and managerial services to the businesses.

  4. Corporate development. Value creation through portfolio management.

Some authors have claimed the role of the corporate center should be minimal. Hedley: The overarching role of the corporate level is that of portfolio manager: to manage the allocation of scarce financial resources amongst the business units. Others, such as Hamel & Prahalad, have emphasized the importance of synergy: The corporate center should not be just another layer of accounting, but must add value by enunciating the strategic architecture.


Which type of influence is best to maximize value creation? The answer is complex and can be determined upon a number of factors. These factors include, but are not limited to: corporate purpose, history and culture. Furthermore the answer depends upon the reconciliation of multiple paradoxes of parenting advantage: Control versus Empowerment, Responsiveness versus Synergy, Portfolio versus Core Competence.


Book: Michael Goold and Andrew Campbell - Corporate-Level Strategy -


Parenting Advantage Forum
  Global Managers in MNCs Should Occasionally Check Local Managers
Managing from a far, that in a nutshell is what is required from MNCs. However, even with regional mangers and country managers, I believe the top management should seek to make random visits to their host countries' offices in order to ensure that w...
     
 
  Strategic Business Plan for a Holding Company
How can I write a strategic business plan for a holding company that acts as a centralised unit and supervising reporting companies with different reporting structures and products? How the business planning cycle should look like?...
     
 
  Parenting Value versus Diversification by Shareholders
Any parenting value add must be considered in the context that business units will have additional costs and ultimately shareholders are in most instances able to diversify on their own....
     
 
  Create or Destroy Values?
In Campbell, A. 2003. The Role of the Parent Company. The Oxford Handbook of Strategy:
Campbell presents stand-alone influence, linkage influence, central functions and services, and corporate development as the "Four Ways to Destroy Values" (p....
     
 
  Relationship Parent and SBU's
The choice of parental value creation also determines what the relationship between the corporate centre and the SBU's will be like....
     
 

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Best Practices - Parenting Advantage Premium

Expert Tips - Parenting Advantage Premium
 

Checklist of Parenting Possibilities

In their article “Corporate Strategy: The quest for parenting advantage”, Goold and Campbell suggest following ten places to look for parenting opport...
Usage (application): Parenting Best Practices, Corporate Strategy, Corporate Governance
 
 
 

Diversification Pitfalls

Diversification of businesses has in many cases resulted in success. An example is General Electric, a very large company that operates in many busine...
Usage (application): Things to Signal and Avoid when Diversifying
 
 
 

What is the Optimal Size for a Corporate Center?

In the HBR of April 2005 on the added value of corporate headquarters, Michael Goold and David Young have investigated whether lean headquarters perfo...
Usage (application): Sizing the Corporate Center
 
 
 

A Corporate Theory: Long-term Handhold and Guidance in Turbulent Times?

According to Professor Todd Zenger, companies should focus less on competitive advantage (this isn't what really interests stock markets). Instead cor...
Usage (application): Inside-out Corporate Strategy, Corporate Visioning
 
 
 

How a Corporate Center can impact the Strategies of its SBU's

How can a Parent Company impact strategic decisions of its daughter companies? Some typical issues have been identified for a parent company to...
Usage (application): Corporate Strategy, Business Unit Strategy, Corporate Governance
 
 
 

An important Notice about Parenting Value!

Please note that the 4 mentioned influences of a parent over its subsidiaries can all result in both a Creation of value BUT ALSO in a Destruction of ...
Usage (application): Corporate Strategy, Parenting, Corporate Governance
 
 
 

What is the Best Location of a Corporate Center?

A somewhat related issue is in what country the Corporate Center should be based.
In an article called: "The Rise of Corporate Nationality" in H...
Usage (application): Corporate Geographic Strategy, Corporate Governance
 
 
 

How can one Assess the Fit Between a Parent Company and its Businesses?

In HBR article named "Corporate strategy: the Quest for Parenting Advantage" (1995) Campbell and Goold extend their Corporate Parenting theory to iden...
Usage (application): Corporate Strategy, Parenting, Corporate Governance
 
 

Resources - Parenting Advantage Premium

Synergy Estimation

Spreadsheet to estimate the value of synergy in a merger. By Aswath Damodaran....
Usage (application): M&A
 

Size, Structure and Performanc

Paper by David J. Collis, David Young and Michael Goold reports on a survey of the structure and staffing of over 600 corporate headquarters in Europe...
Usage (application): Corporate Headquarters
 

Definition, Differences and Relationships between Resources, Capabilities, Competencies and Core Competencies

Javidan (1998) has made a great contribution to answering the question for the relationship / differences between resources, capabilities, competencie...
Usage (application): Core Competencies
 

Strategic and Portfolio Management and Corporate Organization

Presentation about diversification including many graphs and figures for clarification. The presentation includes the following sections:
1. Basi...
Usage (application): Diversification, Corporate Strategy, Portfolio Management, Corporate Center
 
 

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Compare with: Parenting Styles  |  Resource-Based View  |  Competitive Advantage  |  Core Competence  |  Centralization and Decentralization  |  BCG Matrix  |  Growth Phases  |  Distinctive Capabilities  |  Bricks and Clicks  |  Organizational Configurations  |  3C's  |  Acquisition Integration Approaches  |  Office of Strategy Management


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