Forty years after the introduction of the BCG growth‐share matrix, some version of corporate portfolio management (CPM) is employed by most large multibusiness companies. But little is known about the current practices of CPM. Which processes have companies adopted, and which executives in a company tend to be the main participants? What are the major corporate uses of CPM? And how satisfied are today's companies with their approaches? To answer these questions, The Boston Consulting Group, in collaboration with Freiberg University in Germany, conducted a comprehensive global survey on the practices of corporate portfolio management that involved more than 200 senior executives at the largest companies worldwide. These survey responses were supplemented by interviews with 50 senior executives of global multibusiness companies as well as a systematic review of more than 100 major client projects that BCG conducted between 2004 and 2009. One major focus of the survey was the concept of “parenting advantage.” Defined in terms of a particular company being the best possible owner of a particular business, the concept offers a clear framework for identifying the four most important ways in which management can use the principles and methods of CPM to create value for its businesses: Influencing strategy and improving performance through its distinctive capabilities and resources, including periodic evaluations of performance. Identifying and increasing synergies. Providing centralized functional leadership and cost‐efficient services. Monitoring and, when necessary, changing the composition of the portfolio of businesses. While fostering synergies and realizing advantage through centralization of functions and services were considered relevant by about half of the companies responding to the survey, the most important drivers of corporate value added by CPM were said to be the direct influence of the parents expertise and active portfolio monitoring. But even so, only 40% of recent divestiture decisions and 23% of recent acquisitions were said to be triggered by portfolio considerations, suggesting a significant gap between the effort put into CPM processes and their role in corporate‐level decision‐making.

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The concept of parenting advantage offers a clear framework and guiding principle for corporate-level decision-making, including corporate portfolio management and corporate organization. After its introduction in the mid-1990s, the concept was quickly adopted by many standard textbooks on strategic management and became an integral element of the curriculum at most business schools. In this paper, we examine the reverberation of the parenting advantage concept by performing a systematic analysis of the existing literature, including a classification of the relevant publications and a detailed discussion of the key contributions in noted strategic management journals. Our analysis reveals that the concept was well received and was broadly applied to corporate functions, corporate tasks, specific industries, and business environments in qualitative studies. In contrast, we have not found any studies that empirically analyze the impact of the parenting advantage concept on corporate-level decision-making or any conceptual publications which transfer the concept into an instrument for managing the corporate portfolio. We conclude by drafting a future research agenda for the advancement of parenting advantage as an effective concept for corporate-level strategy.

After its introduction in the mid-1990s, the concept of parenting advantage was quickly adopted by many standard textbooks on strategic management. Empirical studies revealed that the concept is considered highly relevant for strategy formulation and portfolio management at corporate level; however, its broader application has not lived up to expectations. This paper assumes that this is due to two major limitations of the original concept: firstly, it neglects the indirect compositional effects of the portfolio that are not due to active involvement of the corporate parent, and secondly, the concept has not been sufficiently operationalized to the level of specific value-added activities. In order to address this apparent research gap, the major attempt of this paper is the development of a theoretical framework that can be used to investigate actual parenting approaches of corporate headquarters and to analyze the relevance of different value added activities in corporate practice, as well as their potential combinations in distinct parenting strategies. To this end, we have developed a three-dimensional framework that accounts for (1) corporate-to-business as well as business-to-business interactions, (2) value-added as well as value-destroyed activities, and (3) strategic as well as operational levers. We operationalized this framework by assigning a broad set of individual activities to these levers, derived from the existing literature of value creation in multi-business companies.