Information Technologies

Why multibusiness corporations split

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We investigate why CEOs of multibusiness corporations decide to engage in a corporate split that spawns multiple independent, smaller, but more adaptive, entities. Through an in-depth examination of the dynamic forces that led CEO Meg Whitman to split HP, we propose that the company’s evolving business ecosystem led to the divergence of the consumer-oriented and enterprise-oriented business models in the corporate portfolio. We document the interplay between inter–business model complementarity and intra–business model complexity and how this vicious cycle, in combination with increasing capital market pressure, led to the CEO decision to split and her public justification for this momentous move. Our combined longitudinal interpretative and realist process-tracing approach generates one of the first conceptual frameworks to integrate insights from the ecosystem and corporate divestiture literatures.
Bibliographic citation: BURGELMAN, R. A., SNIHUR, Y., THOMAS, L. D. W. (2021). Why multibusiness corporations split. CEO strategizing as the ecosystem evolves. Journal of Management. doi:10.1177/01492063211027623.

Reference: 10.1177/01492063211027623 (DOI)
Date: 01/07/2021
Author(s): Robert A. Burgelman; Yuliya Snihur; Llewellyn D.W. Thomas
Document type: Article in Journal (refereed)
Department: Information Systems
Sector:
Languages: English