This paper shows how idiosyncratic resources can be the basis of sustained profitability and persistent heterogeneity under competitive conditions: Generic inputs purchased in the market become idiosyncratic resources by investments in customization. Analytically, we show how heterogeneous firms...

This paper shows how idiosyncratic resources can be the basis of sustained profitability and persistent heterogeneity under competitive conditions: Generic inputs purchased in the market become idiosyncratic resources by investments in customization. Analytically, we show how heterogeneous firms...

A surprisingly neglected facet of sector evolution is the evolutionary analysis of firms', and thus a sector's, scope. Defining a sector as a group of firms that can change their scope over time, we study the transformation of U.S. banking firms. We undertake a sectoral, population-wide study of...

What determines vertical scope? Transactions cost economics (TCE) has been the dominant paradigm for understanding "make" vs. "buy" choices. However, the traditional focus on empirically validating or refuting TCE has taken attention away from other possible drivers of scope, and it has rarely...

This paper reconsiders the drivers and implications of vertical scope, in particular by fleshing out currently loose theorizing about capability-driven integration. As the transaction-cost based view cannot fully explain vertical channel choices in our large-scale US Mortgage Banking Database...

Using a novel database containing the time-series details of the organizational structure of individual bank holding companies, this paper presents the first population-wide study of the transformation in business scope of U.S. banks. Expanding scope has a negative impact on performance on...

The concept of “vertical architecture” defines the scope of a firm and the extent to which it is open to final and intermediate markets. A firm can make or buy inputs, and transfer outputs downstream or sell them. Permeable vertical architectures are partly integrated and partly open to the...

This paper provides an integrative analysis of the drivers of vertical scope, using analytical and computational methods. I propose a model with two vertical segments (upstream and downstream), with firm populations that have heterogeneous capabilities, and an intermediate market subject to...

The issue of who benefits from innovation is a complex one. The answer is notalways the innovator. It may be other firms that are needed to get an innovationto market (complementary assets), or even those who produce imitations andadapted versions of the original innovation.For the innovator the...