Search

When firms face sudden and unusual crises, decision-makers need to quickly respond, and these responses have short-term costs and benefits but can also have long-term consequences that alter the strategy. A question of long-standing interest is whether firms with complex assets and production structures will respond slowly because the complexity delays understanding of the best response and reduces ability to implement it. The airline industry responses to the Covid pandemic are ideal for testing this proposition because the industry experienced rapid and sizable reductions in demand, and airlines differ significantly in complexity along easily measurable dimensions. The analysis demonstrates how airline decisions to store, retire, or sell aircraft differed in response to increased state policy stringency as a function of their complexity. [ABSTRACT FROM AUTHOR]

The trend of state involvement in private firms in China is increasing, which represents the country's major policy reversal of the early era of market reform and privatization of firms. We explore whether state entry into privately owned enterprises (POEs) affects the innovation performance of POEs. We show that state entry has a significant and negative impact on the quantity of general patented innovations but has little effect on the novel patented innovations produced by POEs. We also find that in emerging strategic industries identified by the state, POEs can continue ramping up the quantity of general innovations despite significant state entry; POEs with a high level of accumulated technological capabilities in producing high novelty innovations continue to generate a greater proportion of novel innovations. [ABSTRACT FROM AUTHOR]

Firms sometimes engage in adverse behaviors such as misconduct, which triggers firm actions to recover from the damage to the external evaluation. We investigate the use and effectiveness of name change to repair a firm image tainted by misconduct discovery. We analyzed whether firms were more likely to change names following misconduct discovery, and whether name changes caused audiences to evaluate firms differently. We found that name changes were evaluated positively provided they could be perceived to have a strategic rationale or were during a period when other firms also changed names. The evidence suggests that name changes are used to repair firm image and have effects on how the audience of investors evaluate the firm, but only if the changes were seen as justified. [ABSTRACT FROM AUTHOR]

The behavioral theory of the firm predicts that problemistic search and organizational change occurs after performance below the aspiration level, and this prediction has been strongly supported. The bounded rationality assumption in the behavioral theory of the firm suggests that such search is often myopic. However, we still lack theory explaining how myopia influences decision makers choosing search directions when performance feedback indicates a problem. In this study, we address the question of search direction. We develop theory on how decision maker cognitions formed by their past experiences underlie coalitions that direct myopic search, leading to connections between the decision making group composition and the likelihood of different types of organizational changes. We apply the theory to a well-known reaction to performance feedback--mergers and acquisitions-- and show that the composition of the key decision making group--board of directors--works with performance feedback to affect the type of merger as an outcome of myopic search. [ABSTRACT FROM AUTHOR]