Abstract
The theory has been advanced that size and diversification jointly interact to determine divisionalisation. The present paper finds cross-sectional evidence in support of a version of such a model. However, diachronic analysis reveals that much of the apparent effect of size is spurious. The model is not supported in an empirical test. In view of other recent investigations of the size-divisionalisation thesis, the conclusion is drawn that the validity of theories of this type is open to question. The paper demonstrates the importance of using diachronic methods to study organizational development.
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