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Demand-Side Strategy, Relational Advantage and Partner-Driven Corporate Scope: The Case for Client-Led Diversification

Author

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  • Mawdsley, John Kenneth
  • Somaya, Deepak

Abstract

We advance research on corporate diversification by joining insights from the demand-side and relational views in strategy to offer a novel theory of client-led diversification. We propose that client-led diversification results from a combination of the customer-driven opportunities emphasized in the demand-side view and the creation of added value through relational assets that is a central tenet of the relational view. Furthermore, we hypothesize that suppliers’ client-specific knowledge, clients’ relational commitment to suppliers, and growth opportunities in clients’ markets (relative to the suppliers’ own markets) will magnify the client-led diversification effect. We test our hypotheses using a longitudinal dataset on patent law firms and their diversification into new domains of patent prosecution work for their corporate clients.

Suggested Citation

  • Mawdsley, John Kenneth & Somaya, Deepak, 2018. "Demand-Side Strategy, Relational Advantage and Partner-Driven Corporate Scope: The Case for Client-Led Diversification," HEC Research Papers Series 1252, HEC Paris.
    • Handle: RePEc:ebg:heccah:1252
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    Cited by:

    1. Ping Chen, 2023. "The Effect of Value Creation on Startups Performance in the Digital Environment: Evidence from Chinese Digital Startups," Sustainability, MDPI, vol. 15(5), pages 1-18, February.
    2. Heejung Byun & Joseph Raffiee & Martin Ganco, 2019. "Discontinuities in the Value of Relational Capital: The Effects on Employee Entrepreneurship and Mobility," Organization Science, INFORMS, vol. 30(6), pages 1368-1393, November.
    3. Criaco, Giuseppe & Naldi, Lucia, 2024. "A chip off the old block: Founders' prior experience and the geographic diversification of export sales in international new ventures," Journal of Business Venturing, Elsevier, vol. 39(1).
    4. Cillo, Paola & Priem, Richard L. & Verona, Gianmario & Zanella, Paola, 2021. "Consumer-CEO interaction as catalyst for business model innovation in established firms," Journal of Business Research, Elsevier, vol. 131(C), pages 241-253.
    5. John Kenneth Mawdsley & Lionel Paolella & Rodolphe Durand, 2023. "A rivalry‐based theory of gender diversity," Strategic Management Journal, Wiley Blackwell, vol. 44(5), pages 1254-1291, May.
    6. Xiao Zhang & Luqun Xie & Jiatao Li & Li Cheng, 2022. "“Outside in”: Global demand heterogeneity and dynamic capabilities of multinational enterprises," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 53(4), pages 709-722, June.
    7. Tang Wang & Vikas A. Aggarwal & Brian Wu, 2020. "Capability interactions and adaptation to demand‐side change," Strategic Management Journal, Wiley Blackwell, vol. 41(9), pages 1595-1627, September.
    8. Abdurrezzak Sener & Mehmet Barut & Ali Dag & Mehmet Bayram Yildirim, 2021. "Impact of commitment, information sharing, and information usage on supplier performance: a Bayesian belief network approach," Annals of Operations Research, Springer, vol. 303(1), pages 125-158, August.
    9. Niloofar Abolfathi & Simone Santamaria & Charles Williams, 2022. "How Does Firm Scope Depend on Customer Switching Costs? Evidence from Mobile Telecommunications Markets," Management Science, INFORMS, vol. 68(1), pages 316-332, January.
    10. Guerras-Martín, Luis Ángel & Ronda-Pupo, Guillermo Armando & Zúñiga-Vicente, José Ángel & Benito-Osorio, Diana, 2020. "Half a century of research on corporate diversification: A new comprehensive framework," Journal of Business Research, Elsevier, vol. 114(C), pages 124-141.
    11. Oh, Ga-Eun (Grace) & Aliyev, Murod & Kafouros, Mario & Au, Alan Kai Ming, 2022. "The role of consumer characteristics in explaining product innovation performance: Evidence from emerging economies," Journal of Business Research, Elsevier, vol. 149(C), pages 713-727.
    12. George Chondrakis & Mari Sako, 2020. "When suppliers shift my boundaries: Supplier employee mobility and its impact on buyer firms' sourcing strategy," Strategic Management Journal, Wiley Blackwell, vol. 41(9), pages 1682-1711, September.
    13. George Chondrakis & Eduardo Melero & Mari Sako, 2022. "The effect of coordination requirements on sourcing decisions: Evidence from patent prosecution services," Strategic Management Journal, Wiley Blackwell, vol. 43(6), pages 1141-1169, June.
    14. Faisal Khurshid & Woo‐Yong Park & Felix T.S. Chan, 2019. "Innovation shock, outsourcing strategy, and environmental performance: The roles of prior green innovation experience and knowledge inheritance," Business Strategy and the Environment, Wiley Blackwell, vol. 28(8), pages 1572-1582, December.
    15. Niloofar Abolfathi & Andrea Fosfuri & Simone Santamaria, 2022. "Out of the trap: Conversion funnel business model, customer switching costs, and industry profitability," Strategic Management Journal, Wiley Blackwell, vol. 43(9), pages 1872-1896, September.

    More about this item

    Keywords

    corporate diversification; client-led diversification;

    JEL classification:

    • A10 - General Economics and Teaching - - General Economics - - - General

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