Inter‐Firm Divisional Domain Overlap and New Product Location Choice

Through divisionalization, a division comes to have its own divisional domain or charter for which it is responsible within the firm. I explore whether a focal division’s divisional domain overlap with a rival division would affect this focal division’s decision to locate its new product vis‐à‐vis the rival division. Using a sample of the U.S. automobile industry between 1979 and 1999, I found that a focal division with a high level of inter‐firm divisional domain overlap with a rival division, proportional to the focal division’s own domain, is more likely to locate its new product (here new car model) closer to that of rival’s existing car models. I also found that, up to a certain level of inter‐firm divisional overlap, high density of a focal division would shorten the distance between the focal division’s new car model and the rival division.