Intraorganizational strategy process and the evolution of intra-industry firm diversity: A comparative study of wireless communications business development in the seven Bell regional holding companies

This thesis is motivated by a simple, yet fundamental question in business policy and strategy: Why do firms in the same line of business differ? If firms are different today, why or how is it that they became different? The now prevalent resource-based and capability-based views of strategy as well as the emerging interest in evolutionary perspectives on strategy focus increasing attention on the evolution of intra-industry diversity.;The study explores the question in the context of new business development by established firms. It specifically addresses how and why firms, facing similar opportunities, respond with varied strategic commitments and establish different strategic positions in each new business. In doing so, it takes advantage of the unique research opportunities presented by the break-up of AT&T and the subsequent creation of the seven American Bell regional holding companies. The divergent experiences of the seven similar companies in developing wireless communications businesses create a controlled experiment and an ideal research vehicle.;The study contributes to the ongoing debate in business policy and strategy by presenting field-based insights on the processes, particularly those inside organizations, through which diversity across firms is created, developed and sustained. It proposes two complementary theoretical models grounded in the field data: the snow-balling model and the iterated process model of resource allocation. The former synthesizes existing fragmented discussions concerning the nature of firm evolution, origins of firm diversity, and the conditions under which diversity is sustained. It then presents an integrated framework to explain the evolution of firm diversity. The latter complements the former by investigating under-expored intraorganizational processes. It elucidates dynamic interplays between multi-level managerial actions and internal and external forces--the interplays which shape diversity across firms over time.;These models together reveal that a firm's resource allocation process generates several kinds of momentum, and magnifies initial small differences among firms over time. Managers retain a role in intervening in the process of firm evolution, yet timing of intervention is crucial.