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CAPABILITIES, TECHNOLOGICAL DIVERSIFICATION AND DIVISIONALIZATION
Author(s) -
ARGYRES NICHOLAS
Publication year - 1996
Publication title -
strategic management journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 11.035
H-Index - 286
eISSN - 1097-0266
pISSN - 0143-2095
DOI - 10.1002/(sici)1097-0266(199605)17:5<395::aid-smj826>3.0.co;2-e
Subject(s) - transaction cost , diversification (marketing strategy) , exploit , industrial organization , business , database transaction , economics , microeconomics , marketing , computer science , computer security , programming language
This paper develops and tests the hypothesis that greater R&D diversification is associated with less divisionalization in multidivisional firms. It argues, from transaction cost theory, that the extent of divisionalization of a large firm is indicative of its emphasis on interdivisional coordination, since fewer divisional boundaries reduce interdivisional bargaining costs. Also, greater interdivisional coordination is required to pursue strategies which exploit R&D undertaken in diverse but complementary fields, that is, strategies aimed at broadening technological capabilities. Conversely, less interdivisional coordination is required for more specialized R&D, that is, for strategies aimed at deepening existing capabilities. The hypothesis finds support in patent and organizational data.