Divisionalization, Divisional Status and Product Location Choice

We explore another source of firm competition in multidivisional structure: divisional status. We address this underlying question in the context of a division's new product location choice. We argue that the status of a division or divisional status affects this division's new product location choice vis-a-vis this division's existing products and sister products offered by the other divisions of the same firm. Higher status divisions can secure more resources and are more willing to intrude upon other divisions if necessary. Thus, higher status divisions are more likely to locate their new products further away from their existing products and closer to their sister products offered by other divisions of the same firm. These results have implications on the firm's decision regarding divisionalization, product differentiation and competition.