Internal Capital Markets: Benefits, Costs, and Organizational Arrangements

Julia Porter Liebeskind ()
Additional contact information
Julia Porter Liebeskind: Marshall School of Business, University of Southern California, Los Angeles, California 90089-1421

Organization Science, 2000, vol. 11, issue 1, 58-76

Abstract: Diversification not only internalizes transactions of goods and services, but it also internalizes transactions of capital. Hence, the value of diversification will depend, inter alia, on whether internal capital markets are relatively efficient or inefficient. This essay reviews and discusses the possible benefits and costs of internal capital markets by conducting a careful comparative institutional analysis. The essay concludes that internal capital markets can add value to lines of business only under a limited number of circumstances. Some recent developments in the organization of internal capital markets in diversified firms can be understood as attempts to increase their efficiency.

Keywords: Diversification; Internal Capital Markets (search for similar items in EconPapers)
Date: 2000
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18)

Downloads: (external link)
http://dx.doi.org/10.1287/orsc.11.1.58.12568 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:inm:ororsc:v:11:y:2000:i:1:p:58-76

Access Statistics for this article

More articles in Organization Science from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().