| Given that firms internally develop and/or acquire product lines and business units, this dissertation examines: (a) What reconfigurations do firms undertake involving lines and units, and (b) What effect does reconfiguration have on innovation? By reconfiguration I mean the addition, recombination, and deletion of lines and units.; My research questions are divided into four areas. First, I focus on the retention and reconfiguration of lines and units. I study which types of units are retained longer and reconfigured sooner. Second, I question what forms of unit reconfiguration are most common. I hypothesize that firms are likely to reconfigure acquired units into internally created units, and that firms may also combine acquired units together to create greater firm-specific value. Third, I focus on which units are innovating within a firm, and propose that business unit reconfiguration will have an inverted-U shape impact on firm innovation. Fourth, I examine the interaction between line and unit reconfiguration.; My arguments draw upon organizational learning perspectives, and evolutionary and behavioral views of the firm. I further develop concepts of a reconfiguration framework, retentive capacity of firms, and coordinative routines. The empirical setting for the study is the medical industry from 1975–1997, including firms operating in medical devices, pharmaceuticals, and healthcare services. I test my hypotheses using logistic, accelerated failure time, and negative binomial regression models.; Overall, the majority of hypotheses are supported in this study. Firms have a greater retentive capacity for internally created units and resources, whereas acquired units are reconfigured sooner. Unit reconfiguration usually precedes resource reconfiguration, providing evidence for the embedded nature of resources. Unit reconfiguration's effect on innovation is found to be positive at an increasing rate, exhibiting learning aspects. Most innovations are created in internally created units versus acquired or reconfigured units, highlighting the importance of internal investment even for acquisition active firms. I believe that this study is breaking new ground by exploring how firms change their resources and organizational structure over long periods. |
