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Turning Digital: Diversification in UK Design Consultancy Services

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  • 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
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    References listed on IDEAS

    as
    1. 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.
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    8. 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.
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    More about this item

    Keywords

    Diversification; Business Services; SMEs; Market Entry;

    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

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