Organic growth and shareholder value: A case study of the insurance industry

Gerhard Kling, Abby Ghobadian and Nicholas O'Regan

International Journal of Research in Marketing, 2009, vol. 26, issue 4, 276-283

Abstract: This paper examines organic growth and its impact on shareholder value creation. At a conceptual level, organic and external growth are readily defined; yet, at a practical level, decomposing revenue growth into its constituent elements presents methodological challenges. We develop a method to decompose revenue growth into organic growth, external growth, exchange rate effects, and under- or outperformance. Using extensive data from three insurance companies, AXA, Generali and ING, we analyzed the period from 1995 to 2005. Exchange rate effects were of minor importance, unless companies entered markets at inopportune times. Primarily, the findings indicate that only organic revenue growth enhanced shareholder value. Therefore, managers should focus on marketing as a key driver of organic growth to create value.

Keywords: Insurance industry; Growth strategy; Organic growth; Revenue growth decomposition (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ijrema:v:26:y:2009:i:4:p:276-283

DOI: 10.1016/j.ijresmar.2009.08.002

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