Academic Journal
Are client ties pre‐entry resources? Performance implications of client tie diversification.
| Τίτλος: | Are client ties pre‐entry resources? Performance implications of client tie diversification. |
|---|---|
| Συγγραφείς: | Byun, Heejung1 (AUTHOR) byun@psu.edu |
| Πηγή: | Strategic Management Journal (John Wiley & Sons, Inc.). Aug2026, p1. 32p. 5 Illustrations. |
| Θεματικοί όροι: | *Diversification in industry, *Client relations, *Lobbying, *Organizational performance, *Agency costs, *Market entry |
| Περίληψη: | Research Summary Managerial Summary This study investigates client tie diversification, where firms enter markets with existing clients. Recognizing the theoretical basis for both positive and negative performance implications, the paper adopts a question‐driven approach and discovers a strong negative correlation between client tie diversification and firm performance. Using data from the US federal lobbying industry during the creation of the Homeland Security issue market post‐9/11, I find that lobbying firms entering the new market with existing clients underperform compared to other firms. This underperformance is associated with over‐embeddedness with clients and agency costs from dispersed client tie ownership among lobbyists. These findings challenge the notion that client ties are readily fungible and highlight relational and agency‐related complexities that can lead firms to pursue value‐destroying diversification.Do firms perform better when they diversify into new markets with their existing clients, or by pursuing new opportunities independently? This study found that firms that enter new markets alongside their current clients often underperform compared to those that do not. While it might seem beneficial to leverage existing client relationships, this approach can push firms into areas where they lack capabilities, create inefficiencies, and complicate relationships with other clients, leading to weaker performance. Managers should be cautious about letting client needs drive diversification decisions. Prioritizing current clients may offer short‐term gains but can limit the firm's ability to explore new markets and achieve long‐term growth. Strategic choices should balance client requests with the firm's own strengths and future prospects. [ABSTRACT FROM AUTHOR] |
| Copyright of Strategic Management Journal (John Wiley & Sons, Inc.) is the property of John Wiley & Sons, Inc. and its content may not be copied or emailed to multiple sites without the copyright holder's express written permission. Additionally, content may not be used with any artificial intelligence tools or machine learning technologies. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.) | |
| Βάση Δεδομένων: | Business Source Index |
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| IllustrationInfo | |
| Items | – Name: Title Label: Title Group: Ti Data: Are client ties pre‐entry resources? Performance implications of client tie diversification. – Name: Author Label: Authors Group: Au Data: <searchLink fieldCode="AR" term="%22Byun%2C+Heejung%22">Byun, Heejung</searchLink><relatesTo>1</relatesTo> (AUTHOR)<i> byun@psu.edu</i> – Name: TitleSource Label: Source Group: Src Data: <searchLink fieldCode="JN" term="%22Strategic+Management+Journal+%28John+Wiley+%26+Sons%2C+Inc%2E%29%22">Strategic Management Journal (John Wiley & Sons, Inc.)</searchLink>. Aug2026, p1. 32p. 5 Illustrations. – Name: Subject Label: Subject Terms Group: Su Data: *<searchLink fieldCode="DE" term="%22Diversification+in+industry%22">Diversification in industry</searchLink><br />*<searchLink fieldCode="DE" term="%22Client+relations%22">Client relations</searchLink><br />*<searchLink fieldCode="DE" term="%22Lobbying%22">Lobbying</searchLink><br />*<searchLink fieldCode="DE" term="%22Organizational+performance%22">Organizational performance</searchLink><br />*<searchLink fieldCode="DE" term="%22Agency+costs%22">Agency costs</searchLink><br />*<searchLink fieldCode="DE" term="%22Market+entry%22">Market entry</searchLink> – Name: Abstract Label: Abstract Group: Ab Data: Research Summary Managerial Summary This study investigates client tie diversification, where firms enter markets with existing clients. Recognizing the theoretical basis for both positive and negative performance implications, the paper adopts a question‐driven approach and discovers a strong negative correlation between client tie diversification and firm performance. Using data from the US federal lobbying industry during the creation of the Homeland Security issue market post‐9/11, I find that lobbying firms entering the new market with existing clients underperform compared to other firms. This underperformance is associated with over‐embeddedness with clients and agency costs from dispersed client tie ownership among lobbyists. These findings challenge the notion that client ties are readily fungible and highlight relational and agency‐related complexities that can lead firms to pursue value‐destroying diversification.Do firms perform better when they diversify into new markets with their existing clients, or by pursuing new opportunities independently? This study found that firms that enter new markets alongside their current clients often underperform compared to those that do not. While it might seem beneficial to leverage existing client relationships, this approach can push firms into areas where they lack capabilities, create inefficiencies, and complicate relationships with other clients, leading to weaker performance. Managers should be cautious about letting client needs drive diversification decisions. Prioritizing current clients may offer short‐term gains but can limit the firm's ability to explore new markets and achieve long‐term growth. Strategic choices should balance client requests with the firm's own strengths and future prospects. [ABSTRACT FROM AUTHOR] – Name: AbstractSuppliedCopyright Label: Group: Ab Data: <i>Copyright of Strategic Management Journal (John Wiley & Sons, Inc.) is the property of John Wiley & Sons, Inc. and its content may not be copied or emailed to multiple sites without the copyright holder's express written permission. Additionally, content may not be used with any artificial intelligence tools or machine learning technologies. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract.</i> (Copyright applies to all Abstracts.) |
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| RecordInfo | BibRecord: BibEntity: Identifiers: – Type: doi Value: 10.1002/smj.70119 Languages: – Code: eng Text: English PhysicalDescription: Pagination: PageCount: 32 StartPage: 1 Subjects: – SubjectFull: Diversification in industry Type: general – SubjectFull: Client relations Type: general – SubjectFull: Lobbying Type: general – SubjectFull: Organizational performance Type: general – SubjectFull: Agency costs Type: general – SubjectFull: Market entry Type: general Titles: – TitleFull: Are client ties pre‐entry resources? Performance implications of client tie diversification. Type: main BibRelationships: HasContributorRelationships: – PersonEntity: Name: NameFull: Byun, Heejung IsPartOfRelationships: – BibEntity: Dates: – D: 23 M: 08 Text: Aug2026 Type: published Y: 2026 Identifiers: – Type: issn-print Value: 01432095 Titles: – TitleFull: Strategic Management Journal (John Wiley & Sons, Inc.) Type: main |
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