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Reviewed by John H. Grant, University of Pittsburgh, Katz Graduate School of Business, Pittsburgh, PA.
DOWNSCOPING captures and analyzes the conflicting perspectives of managers, researchers, and public policy analysts who try to understand the limits to effective management of diversified firms. The authors examine the search for appropriate balance between the efficiency of external markets against the effectiveness of internal administrative systems, both of which can contribute to enhancing the economic performance of diversified firms. The authors effectively catalog and analyze much of the research dealing with the management of diversified firms, cite many actual corporate examples, and provide numerous suggestions to executives of such firms.
The book is predicated on the fundamental concern that "the internal governance of large diversified firms is often inadequate." The primary theme of the book is developed around the notion that many firms have diversified their operations beyond the capacity of managers and their supporting systems to outperform external markets. Consequently, they conclude that executives of such firms should reduce the scope of operations through divestitures, redesign managerial incentive systems, or take other actions to focus managerial attention so that strategic controls can perform effectively.
Because the book is intended to appeal to both researchers and practitioners, it seeks to serve diverse objectives. For example, the numerous critiques of research projects are augmented by examples from the popular press, which are intended to illustrate the author's various arguments. One possible result for researchers, however, might be a concern that "convenience sampling" for illustrations may dominate the strength of some research findings. In addition, some researchers may become a bit impatient with a few of the brief examples that are subject to multiple interpretations, whereas some executives may...