Session 399

The Role of Industry/Environmental Conditions in Corporate Strategy

Track F

Date: Tuesday, September 23, 2014

 

Time: 15:30 – 16:45

Paper

Room: Londres


Session Chair:

  • Jane Lu, University of Melbourne

Title: Business Portfolio Restructuring from an Industry Environment Perspective: The Role of Critical Resources

Authors

  • Peter Hildebrandt, University of Göttingen
  • Ulrich Pidun, Boston Consulting Group
  • Michael Wolff, University of Goettingen
  • Jana Oehmichen, University of Goettingen

Abstract: Our empirical study seeks to investigate how the availability of critical resources in an industry environment (i.e. environmental munificence) influences firms' decisions to restructure their business portfolios. We hypothesize that low environmental munificence impedes the tendency of firms to counter poor performance or over-diversification by portfolio refocusing, whilst fostering portfolio diversification. Additionally, we explore which aspect of environmental munificence – capacity, growth/decline or opportunity/threat from critical resources – is driving the hypothesized effect on portfolio restructuring. We will empirically test our hypotheses in a multivariate analysis using longitudinal data collected from a large sample of American and European firms. Our study seeks to contribute theoretical and empirical insights for advancing our understanding of corporate restructuring, the interdependencies between firm and industry characteristics and the environmental munificence concept.

Title: Corporate Venture Capital Investments and Market Valuation: Moderating Role of Uncertainty

Authors

  • Xueji Liang, National University of Singapore
  • Jane Lu, University of Melbourne

Abstract: Corporate venture capital (CVC), defined as external equity investment made by established firms in private entrepreneurial ventures is conceptualized as a real option held by firms. This proposal links CVC investments to firm market valuation and examines the moderating role of uncertainty in this relationship. Drawing on real options theory, we develop hypotheses to argue that firms engaging in CVC investments have higher firm market valuation, but greater proportion of CVC investments to unrelated ventures has negative effect on firm market valuation. Further, this study differentiates uncertainty regarding whether uncertainty can be resolved by waiting, and argues that the positive relationship between CVC investments and market valuation is stronger when industry uncertainty is high, but weaker when firm-specific uncertainty is high.

Title: Policy Risk, Strategic Decisions and Contagion Effects: Firm-Specific and Macro Considerations

Authors

  • Daniel Blake, IE Business School
  • Caterina Moschieri, IE Business School

Abstract: We explore whether and how firm-specific facets of policy risk lead firms to divest. We argue that when firms experience a dispute with a government, although the macro-level uncertainty does not vary, their assessment of their exposure to policy risk changes, making them more likely to divest in that country and, surprisingly, even beyond the boundaries of the host country. Using an originally compiled database of all the disputes presented before the World Bank and the claimants’ divesting activity in the last 18 years, we find support for this argument and no evidence that firm-specific risk spreads to other firms in the country. Our results show that policy risk is an important driver of firm’s divestitures, and identify the mechanisms through which risk can spread

Title: The Dynamics of Regulatory Uncertainty and Concurrent Sourcing in the U.S. Electricity Industry

Authors

  • Colleen Cunningham, Duke University
  • Nilanjana Dutt, Bocconi University

Abstract: This paper explores the relationship between changes in regulatory uncertainty and changes in the sourcing of key resources for firms operating within the U.S. Electric Utilities industry in the 2000s, a period of increasing mandates for renewable inputs. We employ behavioral and evolutionary frameworks to propose that high regulatory uncertainty drives concurrent sourcing, or the simultaneous making and buying of the same input. We further hypothesize that decreases in uncertainty negate the benefits of concurrent sourcing and, thus, should drive firms away from such a strategy. Early results suggest that inertia and path dependence may inhibit movement away from concurrent sourcing. Our paper contributes by uniquely focusing on the evolution of the boundaries of the firm alongside shifts in uncertainty, a key firm boundary driver.

All Sessions in Track F...

Sun: 08:00 – 09:15
Session 400: Teaching Corporate Strategy: Insights and Opportunities
Sun: 11:15 – 12:30
Session 401: Research Synergies in Corporate Strategy and Entrepreneurship
Sun: 15:45 – 17:00
Session 398: Corporate Strategy and Corporate Finance: Continuing the Research Conversation
Sun: 17:15 – 18:30
Session 602: Corporate Strategy IG Business Meeting
Mon: 08:00 – 09:15
Session 308: How do firms grow? Canvasing Different Perspectives
Session 316: Acquisitions and Divestures: Antecedents and Consequences
Mon: 11:00 – 12:15
Session 319: International Corporate Strategy
Mon: 14:45 – 16:00
Session 437: Corporate Structure, Resource allocation, and Portfolio planning
Mon: 16:30 – 17:45
Session 325: Product Scope Strategy in Different Empirical Contexts
Tue: 08:00 – 09:15
Session 327: Market Response to M&A
Tue: 11:00 – 12:15
Session 328: New Angles of Examining Acquisition Strategies
Tue: 15:30 – 16:45
Session 399: The Role of Industry/Environmental Conditions in Corporate Strategy
Tue: 17:15 – 18:30
Session 318: The Boundary of the Firm


Strategic Management Society

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