A Resource-Based Theory of Hyperspecialization and Hyperscaling

Compared to the large-scale enterprises of the past, digital firms tend to be narrower in their vertical scope (hyperspecialization) but larger in their scale (hyperscaling). We explain this phenomenon through a theory about the simultaneous impetus towards scale and specialization created by the opportunity costs of not intensively deploying highly scalable resources. Our theory is supported by a model that combines recent theoretical developments in the RBV with real-world insights about the resource attributes of digital firms. We develop a number of propositions consistent with observed examples and empirical regularities in digital business models, shedding light on the far-reaching ways that technology-enabled resources are reshaping firms in the fourth industrial revolution