Organization 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 infras- tructure” 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 oppor- tunity 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 con- strain 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.
- strategy; structure; organizational evolution; information infrastructure
Available at: http://works.bepress.com/charles_williams/1/