Strategic Management Journal2014-12-03 9:27 AM

What doesn't kill you makes you stronger: The evolution of competition and entry-order advantages in economically turbulent contexts

Javier Garcia-Sanchez, Luiz F. Mesquita, and Roberto S. Vassolo

Keywords: industry life cycle;competitive dynamics;early mover advantages;economic shocks;simulation

We examine the evolution of competition and entry-order advantages in markets under macroeconomic distress. Through formal modeling of early-mover advantages along industry life cycles subjected to economic shocks and based on simulation findings, we propose that such shocks exogenously induce temporary industry discontinuities that shift the relative value of distinct asset endowments, thereby switching the bases for competitive advantages vis-à-vis those found in stable contexts. A vital trade-off then emerges between a firm's financial flexibility and its pace of investments in isolating mechanisms, such that the former operates as a contingency factor for the latter. As such, flexibility superiority boosts early-entrants' advantages, while it alternatively gives laggards a much desired strength to out trump first-mover rivals. Our study informs entry-order advantage theory and management practice in economically turbulent contexts.

Full Article 





Strategic Management Journal

The Strategic Management Journal seeks to publish the highest quality research with questions, evidence and conclusions that are relevant to strategic management and engaging to strategic management scholars.

0 Following 17 Fans 0 Projects 53 Articles


AbstractOrganizational renewal requires that a firm's top managers make timely adjustments in their mental models following significant changes in the

Read More

AbstractDeliberate and emergent strategies may be conceived as two ends of a continuum along which real-world strategies lie. This paper seeks to devel

Read More

Clint Chadwick, Janice F. Super and Kiwook KwonKeywords: resource orchestration; resource-based theory; HR systems; firm performance; structural equati

Read More

Fernando F. Suarez, Stine Grodal and Aleksios GotsopoulosKeywords:entry-timing advantages; categories; first-mover advantage; industry life cycle; domi

Read More

AbstractThis article argues that strategy, like charity, begins at home. Specifically, economy is the best strategy. That is not to say that strategizi

Read More

AbstractThe central argument is that firm behavior is the result of how firms channel and distribute the attention of their decision-makers. What decis

Read More

AbstractRenewed interest in the resource-based theory of the firm has focused attention on the role of heterogeneous organizational ‘competence’ in com

Read More

AbstractIn virtually all economic analyses, differences among firms in the same line of business are repressed, or assumed to reflect differences in th

Read More

AbstractDefining ordinary or ‘zero-level’ capabilities as those that permit a firm to ‘make a living’ in the short term, one can define dynamic capabil

Read More

AbstractAlliances and similar cooperative efforts are receiving increased attention in the strategic management literature. These relationships differ

Read More