Competitive dynamics and early mover advantages under economic recessions

In light of the recent macroeconomic instability in global markets, we examine the evolution of competitive dynamics and firm profitability when industries are subject to recessions. Although ordinary intuition leads most to view recessions as harmful, we highlight conditions under which they enhance the relative value of industry-level supply-side isolating mechanisms, thereby affording early movers significant and sustainable profit advantages vis-à-vis laggards. We observe that the distribution of firm size within the industry switches from a bi-modal distribution (i.e., one dominated by both small and large firms) to a right-skewed one (i.e., dominated mostly by large firms) in these contexts, thereby signaling the rise of important opportunities in the form of less rivalrous competitive contexts for survivors of recessions. We derive our results from formal modeling and multiple simulation runs.À luz da recente instabilidade macroeconômica nos mercados globais, examinamos a evolução da dinâmica competitiva e da rentabilidade das empresas quando indústrias estão sujeitas a recessões. Embora a intuição comum leve a maioria das pessoas a enxergar as recessões como prejudiciais, destacamos condições sob as quais elas melhoram o valor de mecanismos de isolamento em nível de indústria e do lado da oferta, proporcionando aos pioneiros vantagens de lucro significativas e sustentáveis em comparação com seguidores. Observamos que a distribuição do tamanho das empresas passa de uma distribuição bimodal (ou seja, dominada tanto por empresas grandes quanto pequenas) a uma distribuição enviesada à direita (ou seja, predominantemente dominada por empresas grandes) nesses contextos, sinalizando a emergência de importantes oportunidades na forma de contextos de concorrência com menor rivalidade para os sobreviventes das recessões. Derivamos nossos resultados de execuções de modelagem formal e múltiplas simulações.En vista de la reciente inestabilidad macroeconómica en los mercados globales, analizamos la evolución de la dinámica competitiva y rentabilidad firme cuando las industrias están sujetas a recesiones. Aunque la intuición común lleva mayormente a considerar las recesiones dañinas, enfatizamos las condiciones en las que mejoran el valor relativo de mecanismos aislantes de suministros a nivel de la industria, por lo tanto, proporcionándoles a los precursores ventajas provechosas significativas y sostenibles con respecto a los rezagados. Observamos que la distribución de tamaño firme dentro de la industria cambia de una distribución bimodal (es decir, una dominada tanto por pequeñas como por grandes empresas) a una sesgada hacia la derecha (es decir, dominada mayoritariamente por grandes empresas) en dichos contextos, por lo tanto indicando el surgimiento de importantes oportunidades en la forma de contextos menos rivales para sobrevivientes de recesiones. Derivamos nuestros resultados de modelado formal y ejecuciones de simulaciones múltiples

Organizational identity as an anchor for adaptation: an emerging market perspective

Purpose – There is little doubt that organizational identity – that which is central, distinctive, and enduring about an organization – mediates in adaptive processes. Exactly how this mediation takes place, and whether it is favorable or unfavorable to adaptation, must still be fully established. The purpose of this paper is to add to the literature on identity and adaptation by exploring the relationship between these two constructs in family firms operating in an emerging economy. Based on measures of strength of identity, the authors examine how identity affects the adaptive processes of issue identification, strategic impulse definition, and implementation, where the authors look at pace of adjustment. Design/methodology/approach – Longitudinal and comparative case studies were conducted of polar types presenting two pairs of organizations in two separate industries. These organizations faced the challenge of founder succession and a radical shift in macroeconomic conditions over a period of three decades. Through these four cases the authors hope to provide clear pattern recognition of strength of identity and adaptation – and of the relationship between these two constructs – in the face of severe internal and external shocks. The approach seems adequate in the larger context of inductive theory development and particularly suitable to the exploration of theoretical constructs, as it allows the researcher to unravel the underlying dynamics of path dependencies and/or evolutionary processes. Findings – It is found that strong-identity organizations are able to foresee relevant changes in their industries, define adequate strategic responses, and implement them in an evolutionary (i.e. smooth) manner. Conversely, loose-identity organizations misread industry trends, incur strategic paralysis, and must eventually enforce revolutionary (i.e. violent) changes in order to ensure survival. Originality/value – The paper addresses a critical issue for the advancement of organizational theory: the relationship between organizational identity and adaptation in emerging economies. In addition, it has important practical implications for managers doing business in turbulent environments. It makes a sound theoretical contribution and has important managerial implications