The multidivisional (M-form) structure has been variously characterize
d as the most significant organizational innovation in the twentieth c
entury (Williamson, 1985) and as an organizational fossil that is incr
easingly irrelevant in the modern world (Bettis, 1991). Against this b
ackground, the purpose of this paper is threefold. First, to criticall
y evaluate three perspectives, including transaction cost, strategic m
anagement and sociological, relating to the M-form firm. Second, to ex
amine what the empirical evidence finds about relationships proposed b
y these perspectives. Finally, to develop a model that summarizes the
relationships proposed among these perspectives and make suggestions a
bout future theory building and areas where further empirical work is
needed