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The demand-side dynamics of firms' within-industry geographic scope

The demand-side dynamics of firms' within-industry geographic scope The author invokes the concept of strategic adaptation to first specify the evolutionary as well as the strategic character of the causal mechanism (“intra-industry exit”), and second to explain its effect on the evolution of firms' within-industry geographic scope. The author reconciles the two competing logics for firm behavior – strategic choice and environmental selection – that underpin alternate explanations for the relationship between intra-industry exit and the evolution of geographic scope. This paper contributes to both theory and empirics concerning the dynamics of firms' competitive scope, in general, and within-industry geographic scope, in particular.Design/methodology/approachThe US long-distance telecom services industry during the period 1984–1996, which satisfies the empirical requirements of a geographically fragmented industry characterized by demand-side heterogeneity across the submarkets, provides the research setting and panel data to test the empirical hypotheses.FindingsThe author finds that while the firms' overall performance influences their intra-industry exit decisions, it is the firm-in-market performance that influences their decision to exit a specific submarket. The author also finds that intra-industry exit decision, when influenced by firm performance, does lead to reduction in geographic scope.Research limitations/implicationsThis context-specific theory, which conceptualizes the dynamics of firms' geographic scope as an evolutionary process, explains the temporal change in the geographic scope of firms during the latter part of the demand growth stage of a geographically fragmented industry.Originality/valueThis analysis of the demand-side dynamics of firms' within-industry geographic scope focuses on the hypothetical causal effect of intra-industry exit, a pervasive business phenomenon. First, the demand-side analysis of the evolution of geographic scope is grounded in a theoretical framework that melds firm dynamics with submarket dynamics and industry dynamics. Second, this analysis explicates the demand-side underpinnings of the strategic adaptive mechanism. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Strategy and Management Emerald Publishing

The demand-side dynamics of firms' within-industry geographic scope

Journal of Strategy and Management , Volume 15 (4): 26 – Oct 12, 2022

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References (63)

Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
1755-425X
DOI
10.1108/jsma-10-2021-0208
Publisher site
See Article on Publisher Site

Abstract

The author invokes the concept of strategic adaptation to first specify the evolutionary as well as the strategic character of the causal mechanism (“intra-industry exit”), and second to explain its effect on the evolution of firms' within-industry geographic scope. The author reconciles the two competing logics for firm behavior – strategic choice and environmental selection – that underpin alternate explanations for the relationship between intra-industry exit and the evolution of geographic scope. This paper contributes to both theory and empirics concerning the dynamics of firms' competitive scope, in general, and within-industry geographic scope, in particular.Design/methodology/approachThe US long-distance telecom services industry during the period 1984–1996, which satisfies the empirical requirements of a geographically fragmented industry characterized by demand-side heterogeneity across the submarkets, provides the research setting and panel data to test the empirical hypotheses.FindingsThe author finds that while the firms' overall performance influences their intra-industry exit decisions, it is the firm-in-market performance that influences their decision to exit a specific submarket. The author also finds that intra-industry exit decision, when influenced by firm performance, does lead to reduction in geographic scope.Research limitations/implicationsThis context-specific theory, which conceptualizes the dynamics of firms' geographic scope as an evolutionary process, explains the temporal change in the geographic scope of firms during the latter part of the demand growth stage of a geographically fragmented industry.Originality/valueThis analysis of the demand-side dynamics of firms' within-industry geographic scope focuses on the hypothetical causal effect of intra-industry exit, a pervasive business phenomenon. First, the demand-side analysis of the evolution of geographic scope is grounded in a theoretical framework that melds firm dynamics with submarket dynamics and industry dynamics. Second, this analysis explicates the demand-side underpinnings of the strategic adaptive mechanism.

Journal

Journal of Strategy and ManagementEmerald Publishing

Published: Oct 12, 2022

Keywords: Demand-side dynamics; Intra-industry exit; Geographic scope; Strategic adaptation; Strategic dynamics; Evolutionary theory

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