A large literature has successfully employed transaction cost economic theory to describe how exchange conditions affect the optimal form of organization. However, this approach has historically not accounted for the influence of firm‐specific attributes on the governance decision. This paper develops a model based on insights from transaction cost economics, the resource‐based view, and real options theory to examine how transaction‐level characteristics, firm‐specific capabilities, and product‐market scope influence the governance of production. Empirical evidence derived from analysis of 469 make‐or‐buy decisions involving 117 semiconductor firms indicates that decisions regarding the governance of production activities are strongly influenced by both transaction‐ and firm‐level effects. Copyright © 2003 John Wiley & Sons, Ltd.

A new self-report assessment of the basic traits of psychopathy was developed with a general trait model of personality (five-factor model [FFM]) as a framework. Scales were written to assess maladaptive variants of the 18 FFM traits that are robustly related to psychopathy across a variety of perspectives including empirical correlations, expert ratings, and translations of extant assessments. Across 3 independent undergraduate samples (N = 210-354), the Elemental Psychopathy Assessment (EPA) scales proved to be internally consistent and unidimensional, and were strongly related to the original FFM scales from which they were derived (mean convergent r = .66). The EPA scales also demonstrated substantial incremental validity in the prediction of existing psychopathy measures over their FFM counterparts. When summed to form a psychopathy total score, the EPA was substantially correlated with 3 commonly used psychopathy measures (mean r = .81). Finally, in a small male forensic sample (N = 70), the EPA was significantly correlated with scores on a widely used self-report psychopathy measure, disciplinary infractions, alcohol use, and antisocial behavior. The EPA provides an opportunity to examine psychopathy and its nomological network through smaller, more basic units of personality rather than by scales or factors that blend these elements.

We propose that searching for and transferring knowledge across divisions in a diversified firm can cultivate innovation. Using a sample of 211,636 patents from 1,644 companies during the period 1985-96, we find that the use of interdivisional knowledge positively affects the impact of an invention on subsequent technological developments. Furthermore, the positive effect of the use of interdivisional knowledge on the impact of an invention is stronger than the effect of using knowledge from within divisional boundaries or from outside firm boundaries. Our empirical findings have significant implications for the management of knowledge in diversified firms.

Previous findings that related diversification creates value have been called into question over concerns about methodology and measures. Reviewing existing theory to consider how a firm's knowledge base interacts with its product market activity, I address several of these concerns by creating a measure of technological diversity based on citation‐weighted patents. The measure indicates a firm's opportunity for corporate diversification based on economies of scope in valuable knowledge assets, is defined for both single‐ and multibusiness firms, and is not correlated with more fundamental aspects of diversification, such as the number of businesses in the corporate portfolio. Evidence from a large sample of firms shows the positive relationship between diversification based on technological diversity and market‐based measures of performance, controlling for R&D intensity and capital intensity as further indicators of the type of assets underlying diversification. Results hold when controlling for the endogeneity of diversification and performance in a cross‐sectional sample or when controlling for unobserved factors using panel data. Copyright © 2006 John Wiley & Sons, Ltd.