Collective Action Problems and Resource Allocation During Market Formation

Jeroen Struben, Brandon H. Lee and Christopher B. Bingham
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Jeroen Struben: EM - EMLyon Business School
Brandon H. Lee: University of Melbourne
Christopher B. Bingham: UNC - University of North Carolina [Chapel Hill] - UNC - University of North Carolina System

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Abstract: Collective action is critical for successful market formation. However, relatively little is known about how and under what conditions actors overcome collective action problems to successfully form new markets. Using the benefits of simulation methods, we uncover how collective action problems result from actor resource allocation decisions interacting with each other and how the severity of these problems depends on central market- and actor-related characteristics. Specifically, we show that collective action problems occur when actors undervalue the benefits of market-oriented resource allocation and when actors contribute resources that are imperfectly substitutable. Furthermore, we show that collective action problems occur when actors are embedded in networks with others sharing a similar role in market formation. Collectively, our findings contribute new insights to organization theory regarding collective action and market formation and to strategy on value creation and strategic decision making regarding resource allocation.

Keywords: market formation; industry emergence; collective action; collective action problems; Resource allocation; Decision making; Simulation (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-cdm
Note: View the original document on HAL open archive server: https://hal.science/hal-02927584v1
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Citations: View citations in EconPapers (8)

Published in Strategy Science, 2020, 5 (3), pp.245-270. ⟨10.1287/stsc.2020.0105⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02927584

DOI: 10.1287/stsc.2020.0105

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