Technological Diversification and Organizational Divisionalization: The Moderating Role of Complementary Assets

This study uses data on 582 electronics and information technology firms in Taiwan for the period 1997–2005 to investigate the hypothesis that technological diversification increases the extent of organizational divisionalization under firm growth. This study applies competence-based theory to argue that firms spread the technological competence base to achieve firm growth. However, in the face of firm growth, managers of multi-technology firms often utilize a multi-division structure to manage their various technologies based on their operating characteristics or needs. Furthermore, the findings of this study indicate that complementary assets moderate the negative relationship between technological diversification and organizational divisionalization. For firms with specialized complementary assets, multi-technology firms may be observed to consolidate related-technology activities into fewer divisions, facilitating the utilization of these complementary assets in conjunction with other divisions.

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