| Abstract: | This study draws on the institutional and resource‐based theories of the firm and examines whether multi‐product firms use mergers as a strategic tool to reconfigure their product‐mix toward high‐profit products. We propose that mergers facilitate product‐mix reconfiguration by relaxing institutional and organizational constraints on resource redeployment. Analysis of data from the U.S. hospital industry reveals that, relative to non‐merging hospitals, merging hospitals increased their presence in profitable, insured services but did not shift away from low‐profit services used by the uninsured. Copyright © 2004 John Wiley & Sons, Ltd. |
