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

Kling, Gerhard and Ghobadian, Abby and O'Regan, Nicholas (2009) Organic growth and shareholder value: a case study of the insurance industry. International Journal of Research in Marketing, 26 (4). pp. 276-283. ISSN 0167-8116

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Official 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
Research Community:University of Westminster > Westminster Business School
ID Code:7507
Deposited On:04 Feb 2010 14:31
Last Modified:04 Feb 2010 14:31

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