Home / Lectures / Brian Wu, University of Michigan
Cross-Functional and Intertemporal Search: Firm Reorientation after an Industry Shock

Brian Wu, University of Michigan
Description
Semester:
- Winter 2010
Speakers:
Lecture Time:
Fri, March 19, 2010 @ 1:30 pm to 3:00 pm
Lecture Location:
Room K1310, Ross School of Business
Speaker Webpage(s):
http://www.bus.umich.edu/FacultyBios/FacultyBio.asp?id=000868384
Introduced By:
No introduction available.
Abstract
Cross-Functional and Intertemporal Search: Firm Reorientation after an Industry Shock
Firms often face the prospect of adapting to industry environments that have undergone rapid change. Economic, political and competitive factors combine to shape the environments in which firms operate, and competitive advantage is thus created and destroyed with the backdrop of dynamic industry landscapes. In this paper we examine firms’ abilities to successfully reorient following an industry-changing shock, where lower firm fitness levels necessitate broad-scale activity system reconfiguration to enable stronger fit with the new environment. Search efforts in such settings involve choices that span both upstream technology-related and downstream customer-related activities. We propose that a firm’s pre-shock technology and customer portfolio characteristics shape the efficacy of post-shock search processes. Customer-related search, for example, may be more feasible in the post-shock period as compared to technology-oriented search, since the latter can involve a greater number of interdependencies within the firm’s activity system. We use the U.S. defense industry as a setting, aggregating contract data to the firm-level for all firms supplying this industry from 1996 through 2006. We find that firm performance after an industry-wide shock is driven by pre-shock differences in customer and technology focus, with post-shock outcomes varying both cross-functionally and intertemporally. These results suggest a need to incorporate value chain considerations into models of activity system reconfiguration, and also provide a set of implications for firm strategy in rapidly changing environments.
Recording & Additional Notes
Introducer: Sun Hyun Park