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

Kling, G., Ghobadian, A. and O'Regan, N. (2009) Organic growth and shareholder value: A case study of the insurance industry. International Journal of Research in Marketing, 26 (3). pp. 168-179. ISSN 0167-8116

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Publisher's URL: http://dx.doi.org/10.1016/j.ijresmar.2009.08.002

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.

Item Type:Article
Uncontrolled Keywords:insurance industry, growth strategy, organic growth, revenue growth decomposition
Faculty/Department:Faculty of Business and Law > Department of Business Management
ID Code:12611
Deposited By: F. Watt
Deposited On:05 Oct 2010 13:09
Last Modified:12 Aug 2013 08:04

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