TURNING DIGITAL: DIVERSIFICATION IN UK DESIGN CONSULTANCY SERVICES

TURNING DIGITAL: DIVERSIFICATION IN UK DESIGN CONSULTANCY SERVICES
Document type
Discussion paper
Author(s)
Wennberg, Karl Tether, Bruce
Publisher
Imperial College Business School
Date of publication
11 October 2010
Subject(s)
Trends: economic, social and technology trends affecting business
Collection
Business and management
Material type
Reports

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Why do small firms in emerging industries choose to diversify? Theories of strategic management suggest that diversification is driven by search for exogenous market opportunities, deployment of slack resources, or the
exploitation of current knowledge. Institutional organization theory suggests that firms may diversify for reasons unrelated to performance, such as by mimicking similar firms. We analyse the diversification of small UK design consultancies into the field of digital design between 1996 and 2009, a period characterized by the dot-com ‘boom’, ‘bust’ and recovery. Panel data analyses reveal that financial performance had little causal impact upon diversification. Instead, most firms diversified into digital design triggered by internal growth aspirations or by the following of similar firms. We contribute to the literature on small firm growth and diversification by highlighting the interactive nature of strategic and institutional drivers to diversification, and their relationship with firms’ internal growth aspirations.

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