Demand-Side Strategy, Relational Advantage and Partner-Driven Corporate Scope: The Case for Client-Led Diversification
Forthcoming, Strategic Management Journal
43 Pages Posted: 1 Mar 2018 Last revised: 20 Mar 2018
Date Written: February 19, 2018
We advance research on corporate diversification by joining insights from the demand-side and relational views in strategy to offer a novel theory of client-led diversification. We propose that client-led diversification results from a combination of the customer-driven opportunities emphasized in the demand-side view and the creation of added value through relational assets that is a central tenet of the relational view. Furthermore, we hypothesize that suppliers’ client-specific knowledge, clients’ relational commitment to suppliers, and growth opportunities in clients’ markets (relative to the suppliers’ own markets) will magnify the client-led diversification effect. We test our hypotheses using a longitudinal dataset on patent law firms and their diversification into new domains of patent prosecution work for their corporate clients.
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