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

Abstract

O rganization 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.

Structural knowledge: how executive experience with structural composition affects intrafirm mobility and unit reconfiguration

“…People possess and apply knowledge throughout the organization (Grant, 1996; Argote and Ingram, 2000), forming the foundation of activity systems (Spender, 1996) and organizational routines (Nelson and Winter, 1982). At a higher level, the structure of the organization embodies more tacit practices embedded in an organization's structural links (Tushman, 1977; Henderson and Clark, 1990; Karim, 2012) and information processing (Ocasio, 1997; Williams and Mitchell, 2004). These levels of organizational knowledge have often been theorized together, but studied separately.…”

“…Argote et al (2003: 578) state that ‘further research is also needed on the mechanisms through which organizational boundaries affect knowledge transfer’ and ‘do boundaries affect members' awareness of knowledge and the opportunities to transfer it?’ We invert these questions to examine how executives, serving as mechanisms of knowledge transfer, affect internal organizational boundaries between units. Although Williams and Mitchell (2004) do observe that mobile executives' experience with various unit characteristics affect firms' market strategies, there is still a void addressing how mobility and experience affect reconfiguration of units and, thus, internal organizational boundaries. Further, because the study of structural composition is relatively new to the field of strategic management (Karim, 2006, 2009), there are no papers that have examined how executives' experience with those unit characteristics may affect firm boundaries.…”

Selection Capability: How Capability Gaps and Internal Social Frictions Affect Internal and External Strategic Renewal

“…The sector provides a rich setting to study how firms acquire new capabilities in the face of rapid industry changes, including deregulation, price competition, technological convergence, and entry of foreign competitors (Williams and Mitchell 2004). Institutional changes such as deregulation reset an industry's competitive clock (Delmas andTokat 2005, Walker et al 2002).…”

The Architecture and Design of Organizational Capabilities

“…Through the detailed analysis of capabilities, their architecture, and their interactions, we can examine how the firms' structure allows it to canalize its expertise and develop new knowledge, products, or markets (Galunic and Eisenhardt, 2001;Helfat and Eisenhardt, 2004;Williams and Mitchell, 2004). This can help us better understand how firms adapt to change and also consider how the mechanisms at the architectural level compare and contrast with the operation of a firm's senior management.…”

“…As Frank Knight pointed out, the existence of (entrepreneurial) judgement is essential to the existence of firms (Langlois and Cosgel, 1993;Jacobides and Winter, 2006). Such entrepreneurial qualities may be important in both the creation of new capabilities and the recombination of existing ones and also in the creation, design, and effectuation of new "strategic architectures" or business models for the firm.Through the detailed analysis of capabilities, their architecture, and their interactions, we can examine how the firms' structure allows it to canalize its expertise and develop new knowledge, products, or markets (Galunic and Eisenhardt, 2001;Helfat and Eisenhardt, 2004;Williams and Mitchell, 2004). This can help us better understand how firms adapt to change and also consider how the mechanisms at the architectural level compare and contrast with the operation of a firm's senior management.…”