Abstract

The article presents a research on the process by which firms are implementing the portfolio concept and the implications of these processes for effective strategic management. The research based consisted of clinical studies conducted within a sample of twelve large, diversified firms during 1977, 1978, and 1979. The data were subjected to intensive analysis by researchers in order to develop managerially meaningful insights and academically useful frameworks to facilitate further research. The research showed that large, multibusiness firms are using the portfolio concept in one of two different ways. These two responses embody substantially different views of the portfolio concept. Though some features of both responses reflect the individual more than the organization, further interviews showed that these responses generally captured the major differences in the two firm's understanding of the term portfolio concept. This difference seemed to characterize all of the organizations studied, where the portfolio concept was used either as a tool of analysis or in a portfolio management system.