TY - JOUR
T1 - Organic growth and shareholder value
T2 - A case study of the insurance industry
AU - Kling, Gerhard
AU - Ghobadian, Abby
AU - O'Regan, Nicholas
PY - 2009/12/1
Y1 - 2009/12/1
N2 - 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.
AB - 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.
KW - Growth strategy
KW - Insurance industry
KW - Organic growth
KW - Revenue growth decomposition
UR - http://www.scopus.com/inward/record.url?scp=70350043100&partnerID=8YFLogxK
UR - https://www.sciencedirect.com/science/article/pii/S0167811609000640?via%3Dihub
U2 - 10.1016/j.ijresmar.2009.08.002
DO - 10.1016/j.ijresmar.2009.08.002
M3 - Article
AN - SCOPUS:70350043100
SN - 0167-8116
VL - 26
SP - 276
EP - 283
JO - International Journal of Research in Marketing
JF - International Journal of Research in Marketing
IS - 4
ER -