A resource-based analysis of realized knowledge relatedness in diversified firms

The competitiveness of related diversified firms depends upon their ability to exploit knowledge relatedness by using the internal knowledge transfer processes within the organizational network. However, most existing studies deal with potential knowledge relatedness at the corporate level, rather than focusing on realized knowledge flows among divisions at the business unit level. Little is consequently known about the very essence of related diversifiers, i.e., the management of knowledge flows within the corporate knowledge network. This study therefore attempts to bridge this research gap by distinguishing four knowledge roles within related firms and analyzing their relative performance outcomes. Based on a sample of 116 product divisions, results indicate that divisions playing a knowledge provider role outperform those that not play that role, thus signaling unique resource endowments in the formers. On the contrary, those divisions which plays a knowledge receiving role do not benefit from the internal accumulation of resources.