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Examining creative destruction in the IT industry: A resource-based view perspective
This dissertation investigated the relationship between firm resources and firm strategies in response to economic recession. While economic recessions represent one of the most significant environmental influences on firms, markets, and industries, little research has focused on how firms cope with recessionary pressures. Perhaps Josef Schumpeter offered the most concise assessment of the implications of economic recession for firm survival maintaining that, “During recession…much dead wood disappears” (Schumpeter 1939, 143). He also stated that a firm's strategy could only be evaluated under the tumultuous conditions of recession, not the perennial lull of growth. By relying on the resource-based view of the firm as its theoretical frame, this study investigated whether firm heterogeneity and firm strategy influenced within- and postrecession performance. It addressed the following three research questions: First, did firm initial conditions before the recession separate the “dead wood” from viable firms? Second, did firms' resources at the onset of recession constrain their strategic responses to recession? Finally, what were the linkages between within-recession strategy and post-strategy and post-recession performance? This research effort applied rigorous statistical methods to examine the strategies and characteristics of 500 publicly traded information technology firms during the last recession (2000–2003). It also took a detailed look through primary survey data, at the recession strategies of approximately 150 additional firms, both public and private. The study offers several contributions. First, it extended the limited research that examined how firm strategy interacts with economic recession. This study was an attempt to offer a finer level of analysis, in contrast to the larger body of economic literature that only examined macro-economic issues. In doing so, the study offers a strong policy component by helping better understand how recessions affect firms and industries. Second, the study was designed and executed with the resource-based view of the firm as its primary theoretical foundation. Consistent with the theory, the study focused on firm-specific attributes as mitigating factors to recessionary effects. Third, the study relied on innovative statistical models, which not only help yield insightful findings in this study, but they can also be utilized again to study historic or future recessions.
Latham, Scott F, "Examining creative destruction in the IT industry: A resource-based view perspective" (2005). Doctoral Dissertations Available from Proquest. AAI3179895.