The concept of complementarity and its role in the design of organizations has enjoyed increasing attention over the past twenty years. We provide a systematic review of the empirical studies on complementarities in leading journals in management, economics and related disciplines that considers the nature of the factors among which complementarities are found to exist, and the effects of complementarities in organizations. Our findings suggest that complementarities result from the skilful matching of heterogeneous resources which generate positive returns above and beyond the effect of each resource generated on its own. In contrast, the empirical evidence on complementarities between individual organizational and HR practices in firms provides mixed conclusions. We show that complementarities are likely to materialize in complex systems of multiple design elements. Therefore, future research should aim at uncovering complementary effects among multiple elements that capture organizational systems better than a few selected elements only do. Keywords: Complementarities Organizational DesignElectronic copy available at: http://ssrn.com/abstract=1372348 2 THE WHOLE IS MORE THAN THE SUM OF ITS PARTS -OR IS IT? A REVIEW OF THE EMPIRICAL LITERATURE ON COMPLEMENTARITIES IN ORGANIZATIONSOver the past twenty years, the concept of complementarity and its role in the design of organizations has gained widespread attention (Porter & Siggelkow, 2008). In its most general form, the notion of complementarity denotes the beneficial interplay of the design elements of a system where doing more of one thing increases the returns from doing more of the other (Milgrom & Roberts, 1994). However, complementarities may also entail negative consequences.For example, the existence of complementarities among the elements of tightly coupled systems may raise barriers to organizational change, as change in one element of the system would both require and effect change in many or all other elements of that system (Gates, Milgrom, & Roberts, 1996;Matsuyama, 1995;Milgrom & Roberts, 1995b;Roberts, 2004).In this paper, we provide a systematic review of the empirical literature in management and related disciplines on complementarities in organizations, two decades after Stanford economists Paul Milgrom and John Roberts began their seminal work in this area (Milgrom, Qian, & Roberts, 1991;Milgrom & Roberts, 1990a;1990b;1994;1995a). Our work is motivated by the fact that complementarity theory, despite its many strengths, offers little prediction regarding the conditions under which complementarities are likely to emerge, or on the nature of the elements or factors (e.g., organizational characteristics) among which complementarities exist. By studying the empirical evidence, we aim to make inferences regarding the phenomenon of complementarity itself, and thereby to lay the basis for future theoretical work.Our review suggests that complementarities have been investigated empirically from two different perspectives. Studies examining t...

Within the capabilities-based view of the firm, there is debate about the relative importance of ordinary and dynamic capabilities for firm performance and about the extent to which their performance effects are contingent on environmental conditions. We meta-analyze 115 studies to investigate the relationship between both ordinary and dynamic capabilities and the financial performance of firms in relatively stable versus changing environments. The results suggest that the performance effects of both types of capabilities are positive and similar in magnitude. Environmental dynamism reinforces the effects of both ordinary and dynamic capabilities. Furthermore, the two types of capabilities are closely associated. Our findings provide support for a moderate capabilities-based view of the firm, rather than one that considers dynamic capabilities as superior to ordinary ones. Additional supporting information may be found in the online version of this article:Appendix S1. Papers by journal. Appendix S2. Papers by author(s). Appendix S3. Capability coding. Appendix S4. Environmental conditions and capabilities. Appendix S5. Firm performance categorization. Appendix S6. HOMA Procedure. Appendix S7. Results of MASEM -Harmonic means. Appendix S8. Results of HOMA -Pearson correlation coefficients; complete set of measurements. Appendix S9. Results of HOMA -Cross-sectional and panel data; Pearson correlation coefficients.

We study the relationship between diversification and firm performance in the context of the decline in levels of diversification over time. We argue that the pressure to reduce diversification may have more strongly affected those firms whose diversification strategies were most detrimental to firm performance. We employ meta‐analytical regression (MARA) in order to test our hypotheses, using a total of 267 primary studies containing 387 effect sizes based on 150,000 firm‐level observations from over 60 years of research on the diversification–firm performance relationship. The findings suggest that levels of unrelated diversification have decreased, whereas levels of related diversification have increased since the mid‐1990s, following an initial decrease in the 1970s and 1980s. Furthermore, we find that the relationship between unrelated diversification and firm performance has improved significantly over time, whereas the relationship between related diversification and performance has remained relatively stable.