Technological Resources and the Direction of Corporate Diversification: Toward an Integration of the Resource-Based View and Transaction Cost Economics

Brian S. Silverman
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Brian S. Silverman: Harvard Business School, Morgan Hall 243, Soldiers Field, Boston, Massachusetts 02163

Management Science, 1999, vol. 45, issue 8, 1109-1124

Abstract: This study considers how a firm's resource base affects the choice of industries into which the firm diversifies. It offers two main extensions of prior research. First, it operationalizes technological resources at a more detailed level than in prior studies, thereby enabling a more stringent analysis of the direction of diversification. This analysis shows that the predictive power of the "resource-based view of the firm" is greatly improved when resources are measured at a finer level. Second, the study integrates principles from transaction cost economics into resource-based predictions concerning diversification. In particular, it tests the common assumption that rent-generating resources are too asset specific to allow contracting. The findings point to circumstances where resources can be and are exploited through contracting rather than through diversification.

Keywords: diversification; resource-based view; transaction cost economics; patents (search for similar items in EconPapers)
Date: 1999
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Citations: View citations in EconPapers (204)

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