Is Unit Spanning by Executives Associated with Strategic Change?

Abstract

Firms frequently create executive links between units by transferring or sharing people. Organization theory has emphasized that “boundary-spanning” by people can be a source of innovation and change as these executives combine knowledge from different domains. Within the organization, however, spanning connections also strengthen social ties and cognitive filters that may reduce the possibility of strategic change. Our analysis of executive links in medical firms finds that these links, especially when they occur between the corporate unit and business units, are mostly associated with reduced strategic change through market entry and exit. This finding suggests that the cognitive and social commitments from executive links may undermine the knowledge diffusion expected to arise from connecting separate units of the firm.

Keywords: executive links, corporate office, knowledge recombination, boundary spanning, dynamic capabilities, organizational structure, strategic change, inertia