The multidivisional (M-form) structure has been variously characterized as the most significant organizational innovation in the twentieth century (Williamson, 1985) and as an organizational fossil that is increasingly irrelevant in the modern world (Bettis, 1991). Against this background, the purpose of this paper is threefold. First, to critically evaluate three perspectives, including transaction cost, strategic management and sociological, relating to the M-form firm. Second, to examine what the empirical evidence finds about relationships proposed by these perspectives. Finally, to develop a model that summarizes the relationships proposed among these perspectives and make suggestions about future theory building and areas where further empirical work is needed.
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