Abstract
Existing theoretical and empirical strategy models explain the effects of environmental shocks on politics and economics as functions of firm–level characteristics. I offer a theory that suggests that protests are exogenous environmental events that affect firms’ sustainable competitive advantage via changes in corporate strategy and governance, augmenting firm competitiveness and shock–related shifts in technology and human resource management and innovation and growth. I then propose the Ferguson Uprising as an institutional and environmental shift that shaped firms’ responses to the shock, where conglomerates’ organizational strategy spurred the exogenous transfer of technology and reallocation of labor towards the most productive and skill–intensive firms. To test this theory, I first combine different approaches from the management and strategy literatures to develop a set of stylized facts on competitive advantage using data about firm survival in the St. Louis Metropolitan Area from 2011–2021 from The National Establishment Time Series dataset. I then develop a structural model which accounts for the stylized facts, and highlights the degree of dynamic complementarity as a mechanism for protests to affect competitive advantage and develop a static model to explain steady–state patterns. Further, I use the results of a benchmark maximum likelihood estimation and discuss the coefficient estimates and the model fit and then use the estimated model to undertake counterfactuals that quantify the impact of protests on competitive advantage through the degree of dynamic complementarity. Potential results have important implications for the mechanisms through which environmental shocks may affect firms’ sustainable competitive advantage.
Presenters
Joan JosephStudent, PhD, Massachusetts Institute of Technology, Massachusetts, United States
Details
Presentation Type
Paper Presentation in a Themed Session
Theme
KEYWORDS
Conglomerates, Corporate Strategy, Competitive Advantage, Dynamic Complementarity, Firm Survival, Ferguson
