Resolving the Commitment versus Flexibility Trade-off: The Role of Resource Accumulation Lags

Gonçalo Pacheco de Almeida
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Gonçalo Pacheco de Almeida: GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - HEC Paris - Ecole des Hautes Etudes Commerciales - CNRS - Centre National de la Recherche Scientifique

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Abstract: We examine how time-consuming resource accumulation influences the classic strategy trade-off between commitment and flexibility. In particular, using data from the worldwide petrochemical industry during the period 1975 to 1995, we study the impact of new plants' timeto-build on firms' decisions to invest under uncertainty. Our results suggest a nontrivial invertedU shape effect of resource accumulation lags on investment. Contradicting conventional wisdom, we show that competition may be fiercer in industries where firms accumulate resources more slowly and that uncertainty is not always a disincentive for investment.

Keywords: Competitive; Strategy (search for similar items in EconPapers)
Date: 2011-01-01
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Published in Competitive Strategy, Edward Elgar Publishers, pp.312, 2011

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00854032

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