Demand Variation, Strategic Flexibility and Market Entry: Evidence from the U.S. Airline Industry

Jörg Claussen, Christian Essling, Christian Peukert

Research output: Contribution to journalJournal articleResearchpeer-review

Abstract

Research Summary: Entry into dynamic environments can be challenging for firms. We study if, and under which circumstances, firms can use strategic flexibility to enter markets with variable demand. In the airline industry, we find broad support for our hypotheses. We observe less entry with more demand variation, more entry of more flexible firms, and that more flexible firms are more likely to enter markets with greater variation in demand. Furthermore, we find that this relationship is especially strong when variation in demand is harder to predict, which suggests that strategic flexibility is most valuable in unpredictable turbulent environments.
Managerial Summary: We show that firms in the airline industry that choose strategic flexibility over operational efficiency are more likely to enter volatile markets. This finding is especially true when future demand is difficult to forecast using historical data. We conclude that strategic flexibility can be a useful complement to investments in business analytics.
Original languageEnglish
JournalStrategic Management Journal
Volume39
Issue number11
Pages (from-to)2877-2898
Number of pages22
ISSN0143-2095
DOIs
Publication statusPublished - 2018

Keywords

  • Airline industry
  • Demand change
  • Flexibility
  • Market entry
  • Uncertainty

Cite this

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abstract = "Research Summary: Entry into dynamic environments can be challenging for firms. We study if, and under which circumstances, firms can use strategic flexibility to enter markets with variable demand. In the airline industry, we find broad support for our hypotheses. We observe less entry with more demand variation, more entry of more flexible firms, and that more flexible firms are more likely to enter markets with greater variation in demand. Furthermore, we find that this relationship is especially strong when variation in demand is harder to predict, which suggests that strategic flexibility is most valuable in unpredictable turbulent environments.Managerial Summary: We show that firms in the airline industry that choose strategic flexibility over operational efficiency are more likely to enter volatile markets. This finding is especially true when future demand is difficult to forecast using historical data. We conclude that strategic flexibility can be a useful complement to investments in business analytics.",
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Demand Variation, Strategic Flexibility and Market Entry : Evidence from the U.S. Airline Industry. / Claussen, Jörg; Essling, Christian; Peukert, Christian.

In: Strategic Management Journal, Vol. 39, No. 11, 2018, p. 2877-2898.

Research output: Contribution to journalJournal articleResearchpeer-review

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AU - Peukert, Christian

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