| The pursuit of synergy is at the heart of the rationale for the existence of the multi-business organization. Indeed, the promise of synergies is the primary logic behind strategic moves like diversification, acquisitions and alliances. However, despite the enormous attention that management focuses on different means to achieve cross-business synergies, their realization remains an elusive goal for many organizations. In contrast to the economic models of value-creation in diversified firms, which focus on the sources of potential synergy, this inductive study of 12 cross-business synergy initiatives in six firms examines the processes by which potential synergies are realized. This study adds to the understanding of the nature of the corporation and its value by developing a preliminary theoretical framework describing how managers of multi-business firms capture corporate value in dynamic markets through processes of corporate entrepreneurship. In particular, this study explores the changing role of the corporate center and the emerging role of the multi-business team (the general managers)—a new unit of governance that focuses on the relationships among the business-units. Moreover, this research attempts to make a broader contribution to organizational theory by developing a rationale for the M-form that is based on a logic of innovative recombination and the coevolution of the business-units and markets, rather than one of economizing attention and controlling opportunism. This research also makes a broader contribution to theories of strategy and entrepreneurship by focusing on how advantage is derived from continually seeking new opportunities, rather than on assembling resources, establishing sustained positional advantages, or exploiting resource similarities. |
