Date of Award

1995

Document Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

First Advisor

David J. Ketchen, Jr

Abstract

Extant literature has yet to fully examine the antecedents to, and performance implications of, horizontal expansion strategies. Defined as strategies that increase a firm's domain within an industry, these business level strategies constitute an important component of a firm's overall scope. This study takes a complementary view of two theories of the firm--resource theory and governance theory--in order to explain horizontal strategy and performance. An empirical investigation of 101 restaurant chains shows that firms respond to governance cost pressures when choosing among alternative horizontal strategies, except when strategically valuable resource stocks are low. However, no clear link was found between this strategic behavior and performance. The interaction between resources and governance furnishes a stronger explanation of horizontal strategic choice than previous research grounded in either theory alone. Furthermore, one-way relationships identified by prior research may need to be re-evaluated.

Pages

175

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