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RA30WP 2018 LRP Ambivalent Effect of Complexity.pdf (360.03 kB)

The ambivalent effect of complexity on firm performance: a study of the global service provider industry

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journal contribution
posted on 2023-06-09, 19:03 authored by Marcus M. Larsen, Stephan ManningStephan Manning, Torben Pedersen
Prior literature is ambivalent about whether organizational complexity has positive or negative effects on firm performance. Using rich data on global service providers, we explore this ambivalence by disentangling performance consequences of different types of organizational complexity. We show that complexity arising from the coordination of different services and operations negatively influences profit margins through increased coordination costs, whereas complexity coming from the sophistication of particular services may positively influence margins through informational advantages. We also investigate the moderating effects of process commoditization and client-specific investments. Our findings point to critical performance dilemmas facing global service providers in a highly competitive industry, and they help better differentiate performance effects of complexity at different organizational levels.

History

Publication status

  • Published

File Version

  • Accepted version

Journal

Long Range Planning

ISSN

0024-6301

Publisher

Elsevier

Issue

2

Volume

52

Page range

221-235

Department affiliated with

  • Strategy and Marketing Publications

Full text available

  • Yes

Peer reviewed?

  • Yes

Legacy Posted Date

2019-09-25

First Open Access (FOA) Date

2020-02-22

First Compliant Deposit (FCD) Date

2019-09-25

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