IDEAS home Printed from https://ideas.repec.org/p/cbr/cbrwps/wp413.html
   My bibliography  Save this paper

Turning Digital: Diversification in UK Design Consultancy Services

Author

Listed:
  • Wennberg, K.
  • Tether, B.
  • Li, C.
  • Mina, A.

Abstract

Why do small firms in emerging industries choose to diversify? Theories of strategic management suggest that diversification is driven by search for exogenous market opportunities, deployment of slack resources, or the exploitation of current knowledge. Institutional organization theory suggests that firms may diversify for reasons unrelated to performance, such as by mimicking similar firms. We analyse the diversification of small UK design consultancies into the field of digital design between 1996 and 2009, a period characterized by the dot-com 'boom', 'bust' and recovery. Panel data analyses reveal that financial performance had little causal impact upon diversification. Instead, most firms diversified into digital design triggered by internal growth aspirations or by the following of similar firms. We contribute to the literature on small firm growth and diversification by highlighting the interactive nature of strategic and institutional drivers to diversification, and their relationship with firms' internal growth aspirations.

Suggested Citation

  • Wennberg, K. & Tether, B. & Li, C. & Mina, A., 2010. "Turning Digital: Diversification in UK Design Consultancy Services," Working Papers wp413, Centre for Business Research, University of Cambridge.
    • Handle: RePEc:cbr:cbrwps:wp413
    Note: PRO-2
    as

    Download full text from publisher

    File URL: https://www.jbs.cam.ac.uk/wp-content/uploads/2023/05/cbrwp413.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Karl Wennberg, 2009. "Knowledge combinations and the survival of financial services ventures," Journal of Evolutionary Economics, Springer, vol. 19(2), pages 259-276, April.
    2. Antonelli, Cristiano, 1999. "The Evolution of the Industrial Organisation of the Production of Knowledge," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 23(2), pages 243-260, March.
    3. Delmar, Frederic & Shane, Scott, 2004. "Legitimating first: organizing activities and the survival of new ventures," Journal of Business Venturing, Elsevier, vol. 19(3), pages 385-410, May.
    4. Jane W Lu, 2002. "Intra- and Inter-organizational Imitative Behavior: Institutional Influences on Japanese Firms' Entry Mode Choice," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 33(1), pages 19-37, March.
    5. Sidney G. Winter, 2003. "Understanding dynamic capabilities," Strategic Management Journal, Wiley Blackwell, vol. 24(10), pages 991-995, October.
    6. Sayan Chatterjee & Birger Wernerfelt, 1991. "The link between resources and type of diversification: Theory and evidence," Strategic Management Journal, Wiley Blackwell, vol. 12(1), pages 33-48, January.
    7. Klevorick, Alvin K. & Levin, Richard C. & Nelson, Richard R. & Winter, Sidney G., 1995. "On the sources and significance of interindustry differences in technological opportunities," Research Policy, Elsevier, vol. 24(2), pages 185-205, March.
    8. Vasudevan Ramanujam & P. Varadarajan, 1989. "Research on corporate diversification: A synthesis," Strategic Management Journal, Wiley Blackwell, vol. 10(6), pages 523-551, November.
    9. Johan Wiklund & Dean Shepherd, 2003. "Aspiring for, and Achieving Growth: The Moderating Role of Resources and Opportunities," Journal of Management Studies, Wiley Blackwell, vol. 40(8), pages 1919-1941, December.
    10. Rodolphe Durand & Hayagreeva Rao & Philippe Monin, 2007. "Code and conduct in French cuisine: Impact of code changes on external evaluations," Post-Print hal-00459450, HAL.
    11. N/A, 1991. "Entrepreneurship Theory and Practice," Entrepreneurship Theory and Practice, , vol. 15(3), pages 76-76, April.
    12. James O. Fiet, 2007. "A Prescriptive Analysis of Search and Discovery," Journal of Management Studies, Wiley Blackwell, vol. 44(4), pages 592-611, June.
    13. Scott Shane, 2000. "Prior Knowledge and the Discovery of Entrepreneurial Opportunities," Organization Science, INFORMS, vol. 11(4), pages 448-469, August.
    14. Bruce Kogut & Udo Zander, 1996. "What Firms Do? Coordination, Identity, and Learning," Organization Science, INFORMS, vol. 7(5), pages 502-518, October.
    15. Henrik Berglund, 2007. "Opportunities As Existing And Created: A Study Of Entrepreneurs In The Swedish Mobile Internet Industry," Journal of Enterprising Culture (JEC), World Scientific Publishing Co. Pte. Ltd., vol. 15(03), pages 243-273.
    16. Jeffrey G. Covin & Dennis P. Slevin, 1991. "A Conceptual Model of Entrepreneurship as Firm Behavior," Entrepreneurship Theory and Practice, , vol. 16(1), pages 7-26, October.
    17. Rodolphe Durand & Hayagreeva Rao & Philippe Monin, 2007. "Code and conduct in French cuisine: Impact of code changes on external evaluations," Strategic Management Journal, Wiley Blackwell, vol. 28(5), pages 455-472, May.
    18. Arora, Ashish & Arunachalam, V. S. & Asundi, Jai & Fernandes, Ronald, 2001. "The Indian software services industry," Research Policy, Elsevier, vol. 30(8), pages 1267-1287, October.
    19. David L. Deephouse, 1999. "To be different, or to be the same? It’s a question (and theory) of strategic balance," Strategic Management Journal, Wiley Blackwell, vol. 20(2), pages 147-166, February.
    20. Coviello, Nicole & Munro, Hugh, 1997. "Network relationships and the internationalisation process of small software firms," International Business Review, Elsevier, vol. 6(4), pages 361-386, August.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Erik Lundmark & Anna Krzeminska & Dean A. Shepherd, 2019. "Images of Entrepreneurship: Exploring Root Metaphors and Expanding Upon Them," Entrepreneurship Theory and Practice, , vol. 43(1), pages 138-170, January.
    2. Xueyan Dong & Jingyu Gao & Sunny Li Sun & Kangtao Ye, 2021. "Doing extreme by doing good," Asia Pacific Journal of Management, Springer, vol. 38(1), pages 291-315, March.
    3. Matthew McCaffrey, 2014. "On the Theory of Entrepreneurial Incentives and Alertness," Entrepreneurship Theory and Practice, , vol. 38(4), pages 891-911, July.
    4. Elizabeth George Pontikes, 2022. "Category innovation in the software industry: 1990–2002," Strategic Management Journal, Wiley Blackwell, vol. 43(9), pages 1697-1727, September.
    5. Boone, Christophe & Wezel, Filippo Carlo & van Witteloostuijn, Arjen, 2013. "Joining the pack or going solo? A dynamic theory of new firm positioning," Journal of Business Venturing, Elsevier, vol. 28(4), pages 511-527.
    6. Marvel, Matthew R. & Wolfe, Marcus T. & Kuratko, Donald F., 2020. "Escaping the knowledge corridor: How founder human capital and founder coachability impacts product innovation in new ventures," Journal of Business Venturing, Elsevier, vol. 35(6).
    7. Julien Jourdan, 2018. "Institutional Specialization and Survival: Theory and Evidence from the French Film Industry," Strategy Science, INFORMS, vol. 3(2), pages 408-425, June.
    8. Nicole Coviello & Liena Kano & Peter W Liesch, 2017. "Adapting the Uppsala model to a modern world: Macro-context and microfoundations," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 48(9), pages 1151-1164, December.
    9. Julien Jourdan, 2018. "Institutional Specialization and Survival : Theory and Evidence From the French Film Industry," Post-Print hal-01819590, HAL.
    10. Giulia Cancellieri & Massimo Riccaboni, 2015. "From La Bohème to La Wally: How Organizational Status Affects the (Un)conventionality of Opera Repertoires," Working Papers 5/2015, IMT School for Advanced Studies Lucca, revised May 2015.
    11. Yongseok Jang, 2019. "Entreprenurial Human Capital and Inward Technology Licensing in the Context of New Technology-Based Firms," International Journal of Innovation and Technology Management (IJITM), World Scientific Publishing Co. Pte. Ltd., vol. 16(07), pages 1-20, November.
    12. Conger, Michael & McMullen, Jeffery S. & Bergman, Brian J. & York, Jeffrey G., 2018. "Category membership, identity control, and the reevaluation of prosocial opportunities," Journal of Business Venturing, Elsevier, vol. 33(2), pages 179-206.
    13. Eric Yanfei Zhao & P. Devereaux Jennings & Masakazu Ishihara & Michael Lounsbury, 2018. "Optimal Distinctiveness in the Console Video Game Industry: An Exemplar-Based Model of Proto-Category Evolution," Organization Science, INFORMS, vol. 29(4), pages 588-611, August.
    14. Marc Gruber & Ian C. MacMillan & James D. Thompson, 2013. "Escaping the Prior Knowledge Corridor: What Shapes the Number and Variety of Market Opportunities Identified Before Market Entry of Technology Start-ups?," Organization Science, INFORMS, vol. 24(1), pages 280-300, February.
    15. Moshe A. Barach & Christopher I. Rider, 2023. "Discovery, discernment, and exploitation: Entrepreneurial mechanisms at the nexus of individual and opportunity," Strategic Management Journal, Wiley Blackwell, vol. 44(12), pages 2858-2887, December.
    16. Shepherd, Dean A. & Pollack, Jeffrey M., 2025. "A listening model of venture growth: entrepreneurs' listening abilities and ventures' listening capabilities," Journal of Business Venturing, Elsevier, vol. 40(1).
    17. Hai Guo & Jintong Tang & Zhongfeng Su, 2014. "To be different, or to be the same? The interactive effect of organizational regulatory legitimacy and entrepreneurial orientation on new venture performance," Asia Pacific Journal of Management, Springer, vol. 31(3), pages 665-685, September.
    18. Matthew R. Marvel, 2013. "Human Capital and Search–Based Discovery: A Study of High–Tech Entrepreneurship," Entrepreneurship Theory and Practice, , vol. 37(2), pages 403-419, March.
    19. Unger, Jens M. & Rauch, Andreas & Frese, Michael & Rosenbusch, Nina, 2011. "Human capital and entrepreneurial success: A meta-analytical review," Journal of Business Venturing, Elsevier, vol. 26(3), pages 341-358, May.
    20. Anika Laperrière & Martine Spence, 2015. "Enacting international opportunities: The role of organizational learning in knowledge-intensive business services," Journal of International Entrepreneurship, Springer, vol. 13(3), pages 212-241, September.

    More about this item

    Keywords

    Diversification; Business Services; SMEs; Market Entry;
    All these keywords.

    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • L84 - Industrial Organization - - Industry Studies: Services - - - Personal, Professional, and Business Services

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cbr:cbrwps:wp413. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ruth Newman (email available below). General contact details of provider: http://www.jbs.cam.ac.uk .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.