Performance effects of information asymmetry and economies of scope in diversified service firms.
This study examined the performance effects of information asymmetry and economies of scope in diversified service firms. Tests using both accounting- and stock-market-based measures of performance revealed that information asymmetry improved performance more than economies of scope. As hypothesized, the benefits of information asymmetry were greater for firms offering services whose quality cannot be determined until after their purchase (experience services), and the benefits of economies of scope were greater for firms offering services whose quality can be determined prior to purchase (search services). However, without considering the interactive effects of service characteristics, economies of scope were negatively associated with performance for diversified service firms overall.
Leonard N. Stern School of Business, New York University.
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Nayyar
D000288:Administrative Personnel / Q000706:statistics & numerical data; D003132:Commerce / Q000191:economics* / Q000458:organization & administration / Q000706:statistics & numerical data; D003258:Consumer Behavior / Q000191:economics*; D003362:Cost-Benefit Analysis; D003657:Decision Making; D004465:Economic Competition / Q000706:statistics & numerical data*; D006754:Hospital Restructuring; D007257:Information Theory; D012044:Regression Analysis; D011795:Surveys and Questionnaires; D014481:United States