| Firms that do not develop new businesses eventually will fail. Scholars of new business development, strategy, and management and technology claim that an important factor in deciding to invest in a new business ought to be the relatedness of that venture to the parent organization. Few studies, however, have actually examined the decision making process associated with new business development within a firm's existing strategic framework.;The driving questions of this thesis are what characterizes the decision process? What factors are weighed most heavily in the decision-process? Has the weighting or the factors changed over time and if so, how? And how does the weighting of the key factors differ among firms? A number of classic works on organizational choice suggest that goal and environmental uncertainty will be important determinants of a firm's decision-making process.;The advanced electronic display industry, especially flat panel displays, is used to illustrate these themes. The experiences of thirteen large firms--seven in-depth (General Electric, IBM, Texas Instruments, Hughes, AT&T, Kodak, and Tektronix)--are considered. Their choices to develop, or not to develop, new businesses around their display technologies in the early 1980s, and again in recent years, are the foci of this thesis.;Those firms with a well-articulated strategic vision had a decision-making process closely resembling Quinn's "logical incrementalism" form of strategic management. In these firms, strategic fit emerges as the primary factor in new business investment decisions. Technological and market factors are important measures of this fit. Financial considerations dictate how, not whether to invest.;Those firms that had a vague or frequently changing strategic vision had, on the other hand, a decision-making process more closely matching the "Garbage Can" model of decision making as described by Cohen, March, and Olsen. In these firms, factors other than strategic fit such as short-term financial costs or market prospects could dominate.;Policy-makers are urged to note that in no case does one find the mere existence of technology sufficient reason for a firm to invest significant resources in a new business. |
