Flevy Blog is an online business magazine covering Business Strategies, Business Theories, & Business Stories.

Corporate Parenting Advantage Model (CPAM)

Editor's Note: Take a look at our featured best practice, Organization Design Toolkit (103-slide PowerPoint presentation). Recent McKinsey research surveyed a large set of global executives and suggests that many companies, these days, are in a nearly permanent state of organizational flux. A rise in efforts in Organizational Design is attributed to the accelerating pace of structural change generated by market [read more]

Also, if you are interested in becoming an expert on Organizational Design (OD), take a look at Flevy's Organizational Design (OD) Frameworks offering here. This is a curated collection of best practice frameworks based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts. By learning and applying these concepts, you can you stay ahead of the curve. Full details here.

* * * *

In today’s fast-paced business world, large corporations face a big challenge: how to effectively manage and improve their subsidiary companies. Each subsidiary is unique, with its own market demands and strategies, making it hard for parent companies to ensure they all perform well. This is where the Corporate Parenting Advantage Model (CPAM) comes in. CPAM is a strategy that helps big organizations to get the best out of their subsidiaries, encouraging growth and innovation.

Nell and Ambos (2013) emphasized the need for scholarly focus on distinct value-creating activities to assess the significance of parenting advantage, leading to the generation of subsequent propositions:

  1. Stand-Alone Influence vs. 10% vs. 100%
  2. Linkage Influence vs. Enlightened Self-interest
  3. Central Functions and Services vs. Beating the Specialists
  4. Corporate Development vs. Beating the Odds


The Corporate Parenting Advantage Model (CPAM) pertains to the strategic advantages that organizations can acquire through the efficient administration and assistance among their subsidiary enterprises. Understanding the dynamics of the Corporate Parenting Advantage equips organization managers with a strategic lens to evaluate and promote innovation management among its subsidiaries.

Corporate value destruction typically stems from various sources. If a parent organization lacks a deep understanding of its subsidiaries, it can lead to mismanagement, misaligned priorities, and the imposition of unsuitable performance standards.

Here are the 4 propositions by which a corporate parent destroys or creates value for the organizations it possesses:

  1. Stand-Alone Influence vs. 10% vs. 100%: Parent companies help subsidiaries by offering strategic guidance and resources. However, parents might only spend about 10% of their time on each subsidiary, which could be less effective than a dedicated manager’s full attention.
  2. Linkage Influence vs. Enlightened Self-interest: Parents encourage subsidiaries to collaborate for collective benefits, like shared services. However, parents may not always identify the best collaboration opportunities, leading to suboptimal collective benefits.
  3. Central Functions and Services vs. Beating the Specialists: Parents centralize services to save costs and improve efficiency. However, the paradox emerges as external experts might deliver superior services, challenging parents to keep improving their centralized functions.
  4. Corporate development vs. Beating the Odds: Parent companies are in a better position to identify and pursue investment opportunities, like mergers and acquisitions, to drive corporate development. However, the paradox points out that despite these efforts, the success rates of such investments often do not surpass those made by independent businesses or competitors, highlighting the challenge for parent companies to truly outperform the market or expectations in corporate development.

We can evaluate how a parent organization’s capabilities match an organization unit’s success factors and potential improvements with the Ashridge-Fit Matrix which is a strategic tool used to assess the alignment between an organization’s strategy and its internal capabilities. This matrix helps in evaluating the alignment between an organization’s strategy and its resources or competencies. The Corporate Parenting Advantage Model (CPAM) uses the Ashridge-Fit Matrix to help parent companies manage their subsidiaries by categorizing them into 4 types.

This presentation will also include more in-depth discussions on the propositions and paradoxes of the 4 methods by which a corporate parent destroys or creates value for the organizations it possesses. We will also have discussions on how CPAM manages and creates value to its subsidiary businesses through the adaptation of Ashridge-Fit Matrix as a tool for implementation.

Interested in learning more about Corporate Parenting Advantage Model (CPAM)? You can download an editable PowerPoint presentation on  Corporate Parenting Advantage Model (CPAM) here on the Flevy documents marketplace.

Do You Find Value in This Framework?

You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library. FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives.

For even more best practices available on Flevy, have a look at our top 100 lists:

70-slide PowerPoint presentation
Organizational Design (OD) is a structured approach to aligning the structure, processes, and systems of an organization to achieve its strategic objectives and enhance performance. It encompasses various components, including defining the purpose of reorganization, determining supportive [read more]

Want to Achieve Excellence in Organizational Design (OD)?

Gain the knowledge and develop the expertise to become an expert in Organizational Design (OD). Our frameworks are based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts. Click here for full details.

Organizational Design (AKA Organizational Re-design) involves the creation of roles, processes, and structures to ensure that the organization's goals can be realized. Organizational Design span across various levels of the organization. It includes:

1. The overall organizational "architecture" (e.g. decentralized vs. centralized model).

2. The design of business areas and business units within a larger organization.

3. The design of departments and other sub-units within a business unit.

4. The design of individual roles.

In the current Digital Age, there is an accelerating pace of strategic change driven by the disruption of industries. As a result, to remain competitive, Organizational Design efforts are becoming more frequent and pervasive—with the majority of organizations having experienced redesign within the past 3 years. This has only been exacerbated by COVID-19.

Frustratingly, only less than a quarter of these Organizational Design efforts are successful. Most organizations lack the best practice know-how to guide them through these Transformations effectively.

Learn about our Organizational Design (OD) Best Practice Frameworks here.

Readers of This Article Are Interested in These Resources

31-slide PowerPoint presentation
Organizational Design involves the creation of roles, processes, and structures to ensure that the organization's goals can be realized. Organizational Design span across various levels of the organization. This framework focuses on the following 3 initial steps of the full 10-step Organizational [read more]

42-slide PowerPoint presentation
27-slide PowerPoint presentation

About Mark Bridges

Mark Bridges is a Senior Director of Strategy at Flevy. Flevy is your go-to resource for best practices in business management, covering management topics from Strategic Planning to Operational Excellence to Digital Transformation (view full list here). Learn how the Fortune 100 and global consulting firms do it. Improve the growth and efficiency of your organization by leveraging Flevy's library of best practice methodologies and templates. Prior to Flevy, Mark worked as an Associate at McKinsey & Co. and holds an MBA from the Booth School of Business at the University of Chicago. You can connect with Mark on LinkedIn here.

, , , , , , , , , , , , , , , , , , , , , , , ,

Complimentary Business Training Guides

Many companies develop robust strategies, but struggle with operationalizing their strategies into implementable steps. This presentation from flevy introduces 12 powerful business frameworks spanning both Strategy Development and Strategy Execution. [Learn more]

  This 48-page whitepaper, authored by consultancy Envisioning, provides the frameworks, tools, and insights needed to manage serious Change—under the backdrop of the business lifecycle. These lifecycle stages are each marked by distinct attributes, challenges, and behaviors. [Learn more]

We've developed a very comprehensive collection of Strategy & Transformation PowerPoint templates for you to use in your own business presentations, spanning topics from Growth Strategy to Brand Development to Innovation to Customer Experience to Strategic Management. [Learn more]

  We have compiled a collection of 10 Lean Six Sigma templates (Excel) and Operational Excellence guides (PowerPoint) by a multitude of LSS experts. These tools cover topics including 8 Disciplines (8D), 5 Why's, 7 Wastes, Value Stream Mapping (VSM), and DMAIC. [Learn more]
Recent Articles by Corporate Function






The Flevy Business Blog (https://flevy.com/blog) is a leading source of information on business strategies, business theories, and business stories. Most of our articles are authored by management consultants and industry executives with over 20 years of experience.

Flevy (https://flevy.com) is the marketplace for business best practices, such as management frameworks, presentation templates, and financial models. Our best practice documents are of the same caliber as those produced by top-tier consulting firms (like McKinsey, Bain, Accenture, BCG, and Deloitte) and used by Fortune 100 organizations. Learn more about Flevy here.

Connect with Flevy:


About Flevy.com   /   Terms   /   Privacy Policy
© . Flevy LLC. All Rights Reserved.