Research Summary
We study the performance implications of dynamic environments for a leader's rivalry‐based imitation efforts in a setting with multiple rivals. We disentangle competitive ...interactions from environmental changes to show that a leader's simple rules to either imitate the closest rival in terms of attributes (her neighbor) or the closest rival in terms of rank (her challenger) can help to maintain the performance gap to her competitors. Using a computational model and an empirical test, we find that environmental changes alter the trade‐offs between imitation accuracy and the responsiveness to threats from distant rivals. Consequently, when environmental changes are infrequent and minor, neighbor imitation is more effective in maintaining the lead, whereas challenger imitation prevails as environmental changes become more frequent and substantial.
Managerial Summary
By showing that imitating a lower‐ranked rival can help a leader to stay ahead, recent research has overturned the common thinking that imitation is only useful for those trying to catch up with the leader. However, these insights come from contexts in which the leader has only one competitor. Can imitation also be effective for a leader competing against multiple rivals, and whom should the leader imitate? We find that imitation can indeed help the leader to maintain their lead against multiple rivals, but that the choice of imitation target matters and should take the competitive environment into account. In relatively stable environments, imitating your most similar rival works best, while imitating whoever is in second place is a more effective approach in changeable environments.
Sports contexts are increasingly used in management research to test and develop theory and explore managerially relevant phenomena. This growth in publications is likely driven by a series of ...advantages that sports data offers to management researchers. However, such positive features are not a panacea, as several drawbacks are also associated with leveraging sports data, which can limit their usefulness for management scholars. In this paper, we aim to provide management researchers guidance to leverage the advantages and avoid the drawbacks of leveraging sports contexts. To do so, we identify and review 249 papers published over the last 50 years that used sports data to advance management theories and shed light on managerial phenomena. After outlining how these works contributed to the growth of several key conversations in management research, we discuss the advantages of using sports data by outlining how they can advance management research both conceptually (e.g., theory building and radical theorizing) and empirically (e.g., triangulation and replication). We then discuss the potential drawbacks of research using sports data and suggest ways to compensate for them. We close by outlining several new directions in which scholars can leverage sports data to further advance management research.
When is imitation of follower actions an effective competitive strategy for a leader? Building on prior work in competitive dynamics from the Austrian School perspective, we propose that imitation ...can he an effective means of staying ahead, even in the absence of mimetic social pressures. This is because the leader's imitation of follower actions represents equilibrating moves to maintain the status quo in reaction to the disequilibrating actions that the follower undertakes to catch up with the leader. Furthermore, reduction of difference in competitive positioning between leader and follower serves the same purpose, and both imitation strategies are complementary. These effects of "action imitation" and "positioning imitation," we argue, are moderated by the degree of environmental uncertainty, by the extent of the leader's initial advantage, and by the difference between leader and follower capabilities. Our theoretical arguments are supported by an analysis of data on head-to-head boat races from the America's Cup World Series. By developing mechanisms that take endogenous and exogenous contingencies of competitive interactions into account, this paper advances competitive dynamics as a predictive theory of performance outcomes.
Resource Idling and Capability Erosion Ross, Jan-Michael; Li, Toby X.; Hawk, Ashton ...
Academy of Management journal,
10/2023, Volume:
66, Issue:
5
Journal Article
Peer reviewed
Open access
Why would some firms persist with continued operations when facing unfavorable economic conditions? Although prior studies have investigated the roles of uncertainty and sunk costs as sources of ...inertia, an unacknowledged type of sunk cost associated with temporary suspensions of operations is related to the erosion of existing capabilities. Building on the resource-based view and real options theory, we argue that resource idling contributes to capability erosion and that the anticipated capability loss motivates firms to refrain from idling their resources under demand uncertainty in the first place. The negative effects of uncertainty on resource idling are likely to be particularly strong for firms with superior capabilities and for those having a greater reliance on human capital. Using data on oil drilling contractors in Texas, the empirical evidence lends support to our theoretical arguments. Our insights suggest that resource idling shapes the development path of capabilities and risks jeopardizing firms' competitive advantages. The seemingly operational decision of temporarily idling resources can therefore be quite strategic for a firm, and "hysteresis," or inertia in continuing operations, can preserve firms' capabilities.
Research Summary
Why do some firms increase R&D investments in the face of uncertainty, while others do not? Contrary to common wisdom, this study posits that uncertainty prompts firms to invest in ...R&D. The value to invest under uncertainty is, however, bounded by a firm's learning conditions (i.e., human capital, relatedness of innovation activities, and industry maturity). An empirical test on a cross‐industry panel of 551 business divisions of manufacturing firms reveals how organization‐environment interactions determine the firm‐specific value to invest in learning prior to full‐scale commercialization. The insights help to bridge real options theory and the learning literature.
Managerial Summary
Uncertainty about the market environment makes investment decisions in R&D and the commercialization of new products a challenge: should firms “wait and see” until uncertainty resolves to avoid the risk of betting on the wrong product or commit further resources regardless? Our analysis suggests that manufacturing firms often take a mixed approach (“act and see”). While deferring investments in the commercialization of new products, they undertake further R&D to inform decision making by insights that would otherwise be unavailable. However, we find that the benefit of such practice depends on the learning conditions of the individual firm. What is risky for firms with disadvantages in human capital and technology development is value enhancing for firms with good foundations for learning through R&D.
Firms developing new products often face the challenge of making investment decisions under uncertain input–cost conditions due to the price volatilities of the materials they use. These decisions ...need to be made long before the final products are launched on the market. Therefore, firms that invest in the opportunity to switch materials in a timely manner will have the flexibility to react to material price changes and realize competitive advantages. However, volatile material prices may also cause a firm to delay investment. Using real‐options reasoning, this paper studies the influence of input‐cost fluctuations on the timing decision to start new product development (NPD) and thus create the follow‐on opportunity to later replace an existing product. A model that combines waiting and switching options to derive influencing factors of the flexibility value that triggers the investment is developed and tested on a sample of material substitution projects from manufacturing firms. The results show how price uncertainty of the new and the old material, their joint price development, the expected project duration, and competitive preemption are related to the propensity to delay the start of NPD. The findings provide new insights on how timing in adopting materials can be used to hedge exposure to volatile material prices. The insights are relevant for adopters and producers of new materials, as well as for policy makers who strive for supporting the diffusion of new materials.
Being first to market with new products is one of the most enduring pieces of strategic advice handed to managers. This view also emphasizes the importance of launching new products that are based on ...new materials as soon as possible. However, when the input costs of products that embody new materials are uncertain because of volatile material prices, the advantage of being an early mover comes along with the risk of paying unexpectedly high material prices. Real‐option theory suggests delaying material substitution under uncertainty even if the new material enables superior product performance. Firms who have created the flexibility to switch between alternative inputs can benefit from responding to opportunities or threats that arise from changes in the environment. The current study formalizes this logic in a switching‐option model and tests it on a sample of material substitution projects from the manufacturing sector. Our findings shed light on how input‐cost fluctuations influence the timing–performance relationship and bring into question the common advice to launch new products as soon as possible. Instead, our results suggest that firms who align the timing of market launch to trends and fluctuations of material prices improve their competitive positions. These insights suggest novel ways for new product development (NPD) managers how to successfully use external information at the back‐end of the NPD process and how to compete in an era defined by volatile material prices and technological change.
We present an approach that aims to comprehensively account for scientists’ academic engagement and commercialization activities. While previous research has pointed to the economic and social impact ...of these activities, it has also been hampered by the difficulties of accurately quantifying them. Our approach complements university administrative records with data retrieved from external sources and surveys to quantify academic consulting, patenting, and academic entrepreneurship. This allows us to accurately account for ‘independent’ activity, i.e., academic engagement and commercialization outside the formal university channels and often not recorded by universities. We illustrate this approach with data for 10,000 scientists at Imperial College London. Results indicate that conventional approaches systematically underestimate the extent of academic scientists’ impact-relevant activities by not accounting for independent activities. However, with the exception of consulting, we find no significant differences between individuals involved in supported (university-recorded) and independent activity, respectively. Our study contributes to work concerned with developing appropriate and accurate research metrics for demonstrating the public value of science.
Choosing the “right” time is a broadly accepted success factor in new product development. However, the inconsistency of empirical findings on the timing of projects suggests that the range of ...relevant influencing factors is wider than expected. What factors do firms consider when they start the development of a new product and what shapes the decision to launch a new product on the market? In this paper, we summarise empirical and conceptual work on these timing decisions. We propose research consider the influencing factors as a necessary prior step before studies recommend a certain timing for new product development.
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