BUSINESS LEVEL STRATEGY
ARTICLES
Strategic Management: 2023-2024
,Table of Contents
Week 2 - Analysis of external environment. Competitive dynamics....................................2
Boyd & Bresser (2008) – performance implications of delayed competitive responses: evidence
from the US retail industry...........................................................................................................2
Nadkarni, Chen & Chen (2016) – The clock is ticking! Executive temporal depth, industry
velocity, and competitive aggressiveness.....................................................................................4
Week 3 - Analysis of internal environment:RBV, KBV anddynamic capabilities...................9
Schilke (2014) – on the contingent value of dynamic capabilities for competitive advantage: the
nonlinear moderating effect of environmental dynamism............................................................9
Sirmon, D.G., Hitt, M.A., Arregle, J.L. and Campbell, J.T., (2010). The dynamic interplay of
capability strengths and weaknesses: investigating the bases of temporary competitive
advantage..................................................................................................................................12
Week 4 – Strategy and CSR...............................................................................................16
Flammer (2013) – Corporate Social Responsibility and shareholder reaction: the environmental
awareness of investors...............................................................................................................16
(Hawn & Ioannou, 2016) - Mind the gap: The interplay between external and internal actions in
the case of Corporate Social Responsibility.................................................................................19
Week 5 - Strategy and Human Resources.........................................................................23
Hatch & Dyer (2004) – Human capital and learning as a source of sustainable competitive
advantage..................................................................................................................................23
Riley et al. (2017) – Human capital matters: market valuation of firm investments in training
and the role of complementary assets........................................................................................26
Week 6 - Innovation and Competitive Advantage.............................................................29
Cassiman & Veugelers (2006) – in search of complementarity in innovation strategy: internal
R&D and external knowledge acquisition...................................................................................29
Klingebiel & Joseph (2016) – Entry timing and innovation strategy in feature phones................32
1
,Week 2 - Analysis of external environment. Competitive dynamics
Boyd & Bresser (2008) – performance implications of delayed competitive
responses: evidence from the US retail industry
Abstract: the timing of competitive actions and responses is a key management concern that has important
performance consequences. This study focuses on the timing and consequences of competitive responses
According to existing theory, there's an expected negative linear connection between the delay in responding
to competitors and the performance of the company making the response. Conversely, there's an anticipated
positive linear relationship between response delay and the performance of the first mover in a competitive
situation. However, our study challenges these conventional ideas. We propose that the timing of responses
has a more complex relationship with the performance of the responding company, showing a curvilinear
pattern. Meanwhile, when it comes to the first mover, we find that there's a simpler linear relationship with
response delay.
1.Topic & expected contribution:
Main contribution of the paper: paper is to propose and provide evidence for a curvilinear relationship
between response timing and performance in the context of competitive interactions between first movers
and responders. The paper challenges the conventional wisdom that fast responses always lead to better
performance and highlights the risks of both responding too quickly and responding too slowly. The findings
suggest that there is an optimal response delay that leads to higher responder performance, while both fast
and slow responses are associated with lower performance.
2. Framing:
Which theory does the paper use? Which gap in the literature does it address?
In the field of management, theory highlights the significance of responding quickly and decisively in
competitive scenarios. This concept is underlined by Porter (1985), who outlines two crucial reasons why a
rapid response is essential for ensuring profitability:
1. Preventing Barrier Formation: Quick responses are vital because they prevent the initial mover (the
first company to act in the market) from establishing obstacles, such as making it expensive or
inconvenient for customers to switch to other options. These barriers could be problematic for
companies entering the market later, making it harder for them to compete effectively.
2. Signaling Commitment: quick responses are necessary as they demonstrate the incumbent (the
existing market player) is committed to defending its position in the market. This commitment signals
to competitors and customers alike that the company is serious about maintaining its market
presence and is ready to take action to safeguard its position.
The paper addresses a gap in the literature by highlighting the risks of responding too quickly. While previous
research has emphasized the importance of quick responses to competitive challenges, this paper argues that
responding too fast can lead to performance disadvantages
3.Theory development:
Generally, then, theoretical research on response timing argues that attacked incumbents need to
respond as quickly as possible, because response performance will be increasingly limited as a first mover
becomes more established. This reasoning suggests a negative linear relationship between response
delay and responder performance.
While empirical evidence suggesting that a fast follower strategy may be effective is mixed, there is some
empirical support favoring delayed responses. Response delays may be advantageous because they allow
firms to collect more information about a pioneer’s action. Delays may allow for the resolution of market
or technological uncertainties, and the development of more effective responses such as a better product
or a superior marketing program.
o H1: Responder performance and response delay are related in an inverted U-shaped manner: lower
performance will result for fast and late responders, and higher performance for firms with
intermediate response delays supported
2
, First mover research suggests that attacked firms should respond as quickly as possible, because response
performance will be increasingly limited as a first mover becomes more established
On the other hand, response delays may be advantageous because they allow firms to collect more
information about a pioneer’s action. Delays may allow for the resolution of market or technological
uncertainties, and the development of more effective responses such as a better product or a superior
marketing programs
The inconclusive evidence and the fact that both fast and delayed responses can be advantageous suggest a
nonlinear relationship. A response timing decision is always a balancing act, and its effectiveness depends on a
firm’s ability to assess market dynamics correctly and develop an effective response. A balance must be found
between the risks of premature entry against missed opportunity. If a firm responds too early because it has
not waited long enough for uncertainties to subside or to develop an effective response, its performance is
likely to suffer. If a firm responds too late, it may not be able to expand successfully because earlier movers
will have gained enough leadership to dominate the market.
Thus, the puzzle surrounding the performance effect of response timing may be resolved by proposing a
curvilinear relationship: On average, there will be lower success for fast responders, higher success for
responders with intermediate delays, and lower success for late responders. Responders with intermediate
delays can be expected to outperform fast and late responders because a measured delay will allow for
designing an appropriate response without moving too late.
Firms often respond too quickly or too slowly to competitive challenges due to various reasons: bad luck,
conscious choices, and blind spots in competitor analysis.
I. Bad luck occurs when a competitor makes a response based on available information, but unforeseen
developments later prove this decision wrong.
II. Conscious choices happen when a firm, despite understanding the market dynamics, deliberately
deviates from the appropriate response timing, accepting the risk of responding too early or too late.
III. Blind spots, on the other hand, result from incomplete or incorrect analysis of available information,
leading to response timing errors.
Many inappropriate response timing decisions can be traced back to blind spots in competitor analysis. These
blind spots are cognitive biases that cause judgmental mistakes. Three types of blind spots commonly affect
strategic decision making:
I. Limited Perspective: Competitors may frame their competitive problems using a narrow viewpoint,
missing important factors.
II. Nonrational Escalation: Competitors might persist with previously chosen strategic directions even
when evidence suggests a change is needed. refers to a psychological phenomenon where individuals
or organizations continue investing resources, such as time, and money. This escalation occurs
despite mounting evidence that the initial decision was wrong or ineffective. People tend to escalate
their commitment to a decision or project to justify their past investments, even when it might be
wiser to cut losses and change strategies
3
ARTICLES
Strategic Management: 2023-2024
,Table of Contents
Week 2 - Analysis of external environment. Competitive dynamics....................................2
Boyd & Bresser (2008) – performance implications of delayed competitive responses: evidence
from the US retail industry...........................................................................................................2
Nadkarni, Chen & Chen (2016) – The clock is ticking! Executive temporal depth, industry
velocity, and competitive aggressiveness.....................................................................................4
Week 3 - Analysis of internal environment:RBV, KBV anddynamic capabilities...................9
Schilke (2014) – on the contingent value of dynamic capabilities for competitive advantage: the
nonlinear moderating effect of environmental dynamism............................................................9
Sirmon, D.G., Hitt, M.A., Arregle, J.L. and Campbell, J.T., (2010). The dynamic interplay of
capability strengths and weaknesses: investigating the bases of temporary competitive
advantage..................................................................................................................................12
Week 4 – Strategy and CSR...............................................................................................16
Flammer (2013) – Corporate Social Responsibility and shareholder reaction: the environmental
awareness of investors...............................................................................................................16
(Hawn & Ioannou, 2016) - Mind the gap: The interplay between external and internal actions in
the case of Corporate Social Responsibility.................................................................................19
Week 5 - Strategy and Human Resources.........................................................................23
Hatch & Dyer (2004) – Human capital and learning as a source of sustainable competitive
advantage..................................................................................................................................23
Riley et al. (2017) – Human capital matters: market valuation of firm investments in training
and the role of complementary assets........................................................................................26
Week 6 - Innovation and Competitive Advantage.............................................................29
Cassiman & Veugelers (2006) – in search of complementarity in innovation strategy: internal
R&D and external knowledge acquisition...................................................................................29
Klingebiel & Joseph (2016) – Entry timing and innovation strategy in feature phones................32
1
,Week 2 - Analysis of external environment. Competitive dynamics
Boyd & Bresser (2008) – performance implications of delayed competitive
responses: evidence from the US retail industry
Abstract: the timing of competitive actions and responses is a key management concern that has important
performance consequences. This study focuses on the timing and consequences of competitive responses
According to existing theory, there's an expected negative linear connection between the delay in responding
to competitors and the performance of the company making the response. Conversely, there's an anticipated
positive linear relationship between response delay and the performance of the first mover in a competitive
situation. However, our study challenges these conventional ideas. We propose that the timing of responses
has a more complex relationship with the performance of the responding company, showing a curvilinear
pattern. Meanwhile, when it comes to the first mover, we find that there's a simpler linear relationship with
response delay.
1.Topic & expected contribution:
Main contribution of the paper: paper is to propose and provide evidence for a curvilinear relationship
between response timing and performance in the context of competitive interactions between first movers
and responders. The paper challenges the conventional wisdom that fast responses always lead to better
performance and highlights the risks of both responding too quickly and responding too slowly. The findings
suggest that there is an optimal response delay that leads to higher responder performance, while both fast
and slow responses are associated with lower performance.
2. Framing:
Which theory does the paper use? Which gap in the literature does it address?
In the field of management, theory highlights the significance of responding quickly and decisively in
competitive scenarios. This concept is underlined by Porter (1985), who outlines two crucial reasons why a
rapid response is essential for ensuring profitability:
1. Preventing Barrier Formation: Quick responses are vital because they prevent the initial mover (the
first company to act in the market) from establishing obstacles, such as making it expensive or
inconvenient for customers to switch to other options. These barriers could be problematic for
companies entering the market later, making it harder for them to compete effectively.
2. Signaling Commitment: quick responses are necessary as they demonstrate the incumbent (the
existing market player) is committed to defending its position in the market. This commitment signals
to competitors and customers alike that the company is serious about maintaining its market
presence and is ready to take action to safeguard its position.
The paper addresses a gap in the literature by highlighting the risks of responding too quickly. While previous
research has emphasized the importance of quick responses to competitive challenges, this paper argues that
responding too fast can lead to performance disadvantages
3.Theory development:
Generally, then, theoretical research on response timing argues that attacked incumbents need to
respond as quickly as possible, because response performance will be increasingly limited as a first mover
becomes more established. This reasoning suggests a negative linear relationship between response
delay and responder performance.
While empirical evidence suggesting that a fast follower strategy may be effective is mixed, there is some
empirical support favoring delayed responses. Response delays may be advantageous because they allow
firms to collect more information about a pioneer’s action. Delays may allow for the resolution of market
or technological uncertainties, and the development of more effective responses such as a better product
or a superior marketing program.
o H1: Responder performance and response delay are related in an inverted U-shaped manner: lower
performance will result for fast and late responders, and higher performance for firms with
intermediate response delays supported
2
, First mover research suggests that attacked firms should respond as quickly as possible, because response
performance will be increasingly limited as a first mover becomes more established
On the other hand, response delays may be advantageous because they allow firms to collect more
information about a pioneer’s action. Delays may allow for the resolution of market or technological
uncertainties, and the development of more effective responses such as a better product or a superior
marketing programs
The inconclusive evidence and the fact that both fast and delayed responses can be advantageous suggest a
nonlinear relationship. A response timing decision is always a balancing act, and its effectiveness depends on a
firm’s ability to assess market dynamics correctly and develop an effective response. A balance must be found
between the risks of premature entry against missed opportunity. If a firm responds too early because it has
not waited long enough for uncertainties to subside or to develop an effective response, its performance is
likely to suffer. If a firm responds too late, it may not be able to expand successfully because earlier movers
will have gained enough leadership to dominate the market.
Thus, the puzzle surrounding the performance effect of response timing may be resolved by proposing a
curvilinear relationship: On average, there will be lower success for fast responders, higher success for
responders with intermediate delays, and lower success for late responders. Responders with intermediate
delays can be expected to outperform fast and late responders because a measured delay will allow for
designing an appropriate response without moving too late.
Firms often respond too quickly or too slowly to competitive challenges due to various reasons: bad luck,
conscious choices, and blind spots in competitor analysis.
I. Bad luck occurs when a competitor makes a response based on available information, but unforeseen
developments later prove this decision wrong.
II. Conscious choices happen when a firm, despite understanding the market dynamics, deliberately
deviates from the appropriate response timing, accepting the risk of responding too early or too late.
III. Blind spots, on the other hand, result from incomplete or incorrect analysis of available information,
leading to response timing errors.
Many inappropriate response timing decisions can be traced back to blind spots in competitor analysis. These
blind spots are cognitive biases that cause judgmental mistakes. Three types of blind spots commonly affect
strategic decision making:
I. Limited Perspective: Competitors may frame their competitive problems using a narrow viewpoint,
missing important factors.
II. Nonrational Escalation: Competitors might persist with previously chosen strategic directions even
when evidence suggests a change is needed. refers to a psychological phenomenon where individuals
or organizations continue investing resources, such as time, and money. This escalation occurs
despite mounting evidence that the initial decision was wrong or ineffective. People tend to escalate
their commitment to a decision or project to justify their past investments, even when it might be
wiser to cut losses and change strategies
3
