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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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 -


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Best Practices - Parenting Advantage

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Checklist of Parenting Possibilities

Parenting Best Practices, Corporate Strategy, Corporate Governance
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Things to Signal and Avoid when Diversifying
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What is the Optimal Size for a Corporate Center?

Sizing the Corporate Center
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An important Notice about Parenting Value!

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A somewhat related issue is in what country the Corporate Center should be based.
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Corporate Strategy, Parenting, Corporate Governance
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Resources - Parenting Advantage

Synergy Estimation

M&A
Spreadsheet to estimate the value of synergy in a merger. By Aswath Damodaran....
 

Size, Structure and Performanc

Corporate Headquarters
Paper by David J. Collis, David Young and Michael Goold reports on a survey of the structure and sta...
 

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

Core Competencies
Javidan (1998) has made a great contribution to answering the question for the relationship / differ...
 

Strategic and Portfolio Management and Corporate Organization

Diversification, Corporate Strategy, Portfolio Management, Corporate Center
Presentation about diversification including many graphs and figures for clarification. The presenta...
 
 

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Presentations about Parenting Advantage


     
 

Presentations about Corporate Center


     
 

Books about Parenting Advantage


     
 

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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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