Unraveling the “Black Box” of Cross-Business-Unit Collaboration

Abstract

Extensive research identified the economic, organizational and social factors that configure the process of cross-business unit (“cross-BU”) collaboration leading to the creation of cross-BU synergies. Yet, the inner workings of the “black box” determined by the multiple cause and effect relationships between these factors remains to be determined. Building from current theory, we studied the process of cross-BU collaboration through a simulation model. We found that the initial conditions and patterns of evolution of the different configurations of factors lead to significant differences in the performance of cross-BU collaboration initiatives. Our findings extend previous research, characterizing cross-BU synergy creation as a multidimensional and complex phenomenon, by identifying the drivers of such complexity and its effects on performance. We also shed light on the impact of business relatedness on performance and on the roles of the corporate level in multi-business firms. We finally discuss how managers should manage cross-BU initiatives under different organizational arrangements.