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Focusing Firm Evolution: The Impact of Information Infrastructure on Market Entry by U.S. Telecommunications Companies, 1984--1998

  • Charles Williams

    ()

    (Department of Business Administration, College of Business, University of Illinois at Urbana--Champaign, 1206 South Sixth Street, Champaign, Illinois 61820)

  • Will Mitchell

    ()

    (The Fuqua School of Business, Duke University, Box 91020, Durham, North Carolina 27708)

Registered author(s):

    Organization structure acts as a lens on the environment, gathering information and shaping its flow through a firm to inform managers' choices. This shaping of information flow happens through an organization's operating units, which selectively process information from the environment, and through the links between them, which pass information between units. We explore the relationship between this "information infrastructure" and firm strategy using structure and service information from the eight largest telephone service providers in the United States from 1984 to 1998. We find that firms with more units that scan areas of opportunity are more likely to enter a market, while firms with more units that scan nonfocal areas are less likely to enter the market. We also find that personnel links between units and the corporate level of the firm often constrain entry to new markets by dampening a unit's appetite for risk. Personnel links between operating units, on the other hand, can make a firm more likely to enter new markets, particularly when the cooperating units combine different sets of information. Thus, a firm's information infrastructure plays a dual role in shaping firm evolution, leading toward some paths and away from others.

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    File URL: http://dx.doi.org/10.1287/mnsc.1040.0223
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    Article provided by INFORMS in its journal Management Science.

    Volume (Year): 50 (2004)
    Issue (Month): 11 (November)
    Pages: 1561-1575

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    Handle: RePEc:inm:ormnsc:v:50:y:2004:i:11:p:1561-1575
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    1. Richard M. Burton & Jørgen Lauridsen & Børge Obel, 2002. "Return on Assets Loss from Situational and Contingency Misfits," Management Science, INFORMS, vol. 48(11), pages 1461-1485, November.
    2. Constance E. Helfat, 1994. "Evolutionary Trajectories in Petroleum Firm R&D," Management Science, INFORMS, vol. 40(12), pages 1720-1747, December.
    3. Christensen, Clayton M. & Rosenbloom, Richard S., 1995. "Explaining the attacker's advantage: Technological paradigms, organizational dynamics, and the value network," Research Policy, Elsevier, vol. 24(2), pages 233-257, March.
    4. Martin, Xavier & Mitchell, Will, 1998. "The influence of local search and performance heuristics on new design introduction in a new product market," Research Policy, Elsevier, vol. 26(7-8), pages 753-771, April.
    5. Constance E. Helfat & Marvin B. Lieberman, 2002. "The birth of capabilities: market entry and the importance of pre-history," Industrial and Corporate Change, Oxford University Press, vol. 11(4), pages 725-760, August.
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