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

Organic growth and shareholder value: A case study of the insurance
Organic growth and shareholder value: A case study of the insurance
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
insurance industry, growth strategy, organic growth, revenue growth decomposition
0167-8116
276-283
Kling, Gerhard
feea1f9e-c49a-4d9c-b688-ec839cef9624
Ghobadian, Abby
909abc43-9c78-4f86-8ec4-2f47f3159d3d
O’Regan, Nicholas
43e5cfdf-51fb-4362-98ff-58e2ce3c8f5c
Kling, Gerhard
feea1f9e-c49a-4d9c-b688-ec839cef9624
Ghobadian, Abby
909abc43-9c78-4f86-8ec4-2f47f3159d3d
O’Regan, Nicholas
43e5cfdf-51fb-4362-98ff-58e2ce3c8f5c

Kling, Gerhard, Ghobadian, Abby and O’Regan, Nicholas (2009) Organic growth and shareholder value: A case study of the insurance. International Journal of Research in Marketing, 26 (4), 276-283. (doi:10.1016/j.ijresmar.2009.08.002).

Record type: Article

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

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Published date: December 2009
Keywords: insurance industry, growth strategy, organic growth, revenue growth decomposition
Organisations: Centre for Digital, Interactive & Data Driven Marketing, Management

Identifiers

Local EPrints ID: 165717
URI: http://eprints.soton.ac.uk/id/eprint/165717
ISSN: 0167-8116
PURE UUID: f3653134-19b6-4ce1-85c9-26e6c63b1bd0

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Date deposited: 19 Oct 2010 14:08
Last modified: 14 Mar 2024 02:11

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Contributors

Author: Gerhard Kling
Author: Abby Ghobadian
Author: Nicholas O’Regan

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