This study shows that the interplay between "adjustment costs", "coordination costs" and within-industry diversification benefits, results in an S-shaped relationship between within-industry diversification and firm performance. At low levels of within-industry diversification, coordination costs are negligible but "adjustment costs" are higher than the synergy benefits of a limited product scope, hence leading to negative performance outcomes. At moderate levels of within-industry diversification synergies between related product categories substantially increase and outweigh the rise in adjustment and coordination costs, resulting in positive performance outcomes. Yet, extensive within-industry diversification gives rise to considerable coordination costs, which, coupled with adjustment costs, outweigh synergy effects and hamper performance. The study further shows that a greater change rate of within-industry diversification results in negative performance outcomes.

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Research Summary: This paper examines the relationship between strategic decision-making at the subsidiary level and organizational structure. In many organizations, headquarters and subsidiaries are separated by intermediate subsidiaries. Building on the attention-based view of the firm, we argue that the greater the "organizational distance" of a focal subsidiary from headquarters (measured by the number of intermediate subsidiaries separating the subsidiary from headquarters), the lower the attention that headquarters devote to the subsidiary. Thus, subsidiary autonomy from headquarters increases with organizational distance. Using a large comprehensive dataset on the structure of corporate groups in Western Europe, we provide several pieces of evidence consistent with these hypotheses. By contrast, we find little support for the view that tall pyramids are created to magnify the voting control of large shareholders. Managerial Summary: Corporate groups-confederations of legally independent firms linked via ownership tiesare common around the world. An important function of headquarters in corporate groups is to allocate resources among member firms. We argue that, because headquarters mostly focus on allocating resources among units that they directly own, subsidiaries near the top of the group perform differently in response to changing external

This paper applies the global system view to the location and control strategies of firms. This approach envisages the world as a grid of potential locations for value-adding activities, connected by flows of information and products. The simplified model provides a basis for testing new hypotheses on the number of firms that will exist in the global system, their locations, and their organisational boundaries. The paper provides a rigorous and formal exposition of the theories of internationalisation and the multinational enterprise. Journal of International Business Studies (2004) 35, 33–45. doi:10.1057/palgrave.jibs.8400059

The paper presents a simple general equilibrium model that formalizes internationalization in the eclectic paradigm based on a reconfiguration of concepts taken from the new classical economics literature. The model enables us to address simultaneously the role of ownership, location and internalization advantages, and their interaction, in the emergence of the multinational enterprise (MNE) through a set of mathematical inequalities. Our model offers a bridge between the detached perceptions of the MNE often held by international trade economists and international business scholars, and makes specific aspects of the eclectic paradigm empirically testable. Journal of International Business Studies (2009) 40, 58–70. doi:10.1057/palgrave.jibs.8400421