Technology and Corporate Scope: Firm and Rival Innovation as Antecedents of Corporate Transactions
Article first published online: 16 NOV 2011
Copyright © 2011 John Wiley & Sons, Ltd.
Strategic Management Journal
Volume 33, Issue 4, pages 347–367, April 2012
How to Cite
Kaul, A. (2012), Technology and Corporate Scope: Firm and Rival Innovation as Antecedents of Corporate Transactions. Strat. Mgmt. J., 33: 347–367. doi: 10.1002/smj.1940
- Issue published online: 3 FEB 2012
- Article first published online: 16 NOV 2011
- Accepted manuscript online: 2 NOV 2011 08:33AM EST
- Manuscript Revised: 20 OCT 2011
- Manuscript Received: 12 FEB 2009
- technological innovation;
- resource-based view;
This paper studies the role of technological innovation as an antecedent of changes in corporate scope. It argues that technological innovations prompt the firm to reconfigure its corporate portfolio—to redeploy resources to areas of new opportunity while it divests out of marginal businesses. Results from a cross-industry sample of U.S. manufacturing firms show successful innovation by a firm is followed by both expansion into new areas through complementary resource seeking acquisitions and divestment out of existing noncore businesses. This relationship is found to be moderated by the level of investible resources available to the firm, and supports the notion of scarce resources as a constraint on firm scope. In addition, firms are found to change their corporate scope in response to rival innovation. Copyright © 2011 John Wiley & Sons, Ltd.