This paper studies how firms reorganize after diversifying into related businesses. Specifically, we propose that outsourcing is one way to reduce the coordination costs that arise in multi-divisional firms. We, also, examine the mechanisms underlying coordination costs, and show how alternative...

This paper studies how firms reorganize following diversification. We propose that firms use outsourcing, or vertical dis-integration, to reduce scope-induced governance costs that arise following diversification. We also consider the source of scope diseconomies, and argue that different...

This paper studies how firms reorganize after diversifying into related businesses. Specifically, we propose that outsourcing is one way to reduce the coordination costs that arise in multidivisional firms. We, also, examine the mechanisms underlying coordination costs, and show how alternative...

This paper examines the impact of coordination costs and organizational rigidity on the returns to diversification. The central thesis is that coordination costs offset economies of scope, while organizational rigidity increases coordination costs, further constraining economies of scope. The...