RESEARCH ARTICLE The degree of collaboration between business units in diversified corporation: A strategic perspective Pratima Verma 1 | Vimal Kumar 1 | Ajay Jha 2 | Vignaesh Muthukumaar 3 | Manh-Hoang Do 4,7 | Nagendra K. Sharma 4,5 | Sachin Gupta 6 1 Department of Information Management, Chaoyang University of Technology, Taichung, Taiwan, ROC 2 Department of Transportation Management, School of Business, University of Petroleum and Energy Studies, Dehradun, Uttarakhand, India 3 Data Science and Analytics at EXL Services, Bengaluru, Karnataka, India 4 Department of Business Administration, Chaoyang University of Technology, Taichung, Taiwan 5 Department of Management Studies, Graphic Era University, Dehradun, India 6 Department of Chemistry, Chaoyang University of Technology, Taichung, Taiwan, ROC 7 Faculty of Economics, Tay Nguyen University, Buon Ma Thuot, Vietnam Correspondence Vimal Kumar, Department of Information Management, Chaoyang University of Technology, Taichung 41349, Taiwan, ROC. Email: vimaljss91@gmail.com Abstract The Company's CEOs are always obsessed with diversification since the early 1960s and this belief is continuing to date. Diversified corporations run multiple businesses to generate various opportunities to gain competitive advantages and differentiate themselves in the market. This study considered the business strategy of business units (BUs) for diversified corporations. Based on the dominating strategy pursued by BUs, this study tried to investigate the level of collaboration between the BUs when these BUs have a similar strategy or different strategy. Thus, this article aims to examine the level of collaboration or coordination between BUs in Indian diversified companies. A survey was carried out with 107 companies for examination and these companies were chosen to be of different sizes and sectors. The findings represent that the level of collaboration is high when the BUs have a similar kind of business strategy while the level of collaboration is low when they have different kinds of business strategies. These findings are useful for the current organizations to seek collaboration between BUs in the diversified corporation. KEYWORDS business strategy, business unit, collaboration, coordination, diversified corporation 1 | INTRODUCTION Inter-organizational actions include contracting, joint ventures, public-private partnerships, trade associations, and multinational alli- ances under an umbrella term, that is, collaboration (Abrahamsson, 1993; Wood & Gray, 1991). There are many independent BUs that exist in the diversified corporation in which “collaboration” is also found. The collaboration among the BUs rises the sharing of resources and skills in a diversified corporation. In diversified corporations, many BUs are shown their existence while they may be related or unrelated. There are few BUs show their relatedness in terms of resources, skills, and know-how, and so on that can be shared between the BUs (Wang, Lin, & Chu, 2011). These kinds of sharing enhance the competitive advantage, cost saving, and differentiation in terms of products and ser- vices among the BUs (Wang et al., 2011). Thus, in this scenario, the “collaboration” comes into the highlight among the BUs. However, collaboration achievement is very difficult between the BUs because every business unit (BU) has its own organizational culture, structure, and strategy; and their respective managers do not have the same incentive for sharing the resources and skills. But once the BUs can share the resources, skills, and know-how then they gain the cost advantage and differentiation advantages which is non-imitable for others. In this article, we focused on the diversified corporation and its BUs. Penrose (1959) defines “Diversification is an important engine for growth as firms deploy their excess resources to new market opportu- nities”. Businesses relate to one another “when a common skill, resource, market or purpose applies to each” (Rumelt, 1974). Collabora- tion, on the other hand, is broadly defined as “a situation in which two or more people or groups or organizations learn or attempt to learn something together,” and to be more specific as a joint problem solving (Dillenbourg, Baker, Blaye, & O'Malley, 1996). Interactivity, Received: 6 February 2020 Revised: 6 March 2020 Accepted: 7 March 2020 DOI: 10.1002/bsd2.108 Bus Strat Dev. 2020;1–12. wileyonlinelibrary.com/journal/bsd2 © 2020 ERP Environment and John Wiley & Sons Ltd. 1