Strategy Behaviors of Firms in Times of External Shocks and their Impact on Operating Performance: An Event Study

摘要

This study investigates whether changes in strategicbehaviors of firms in times of external shocks suchas economic recessions impact performance of firmsin subsequent time periods. A number of studiesin strategic management adduce the importance ofpersistence in firm strategy as a determinant of firmperformance. That is, firm level strategy ought to beseen as a pattern of resource allocations over timerather than annual budgeting process. However,because strategies have to be aligned with externalenvironmental changes, it is to be expected thatexternal shocks such as extreme recessions can breakthe pattern of resource allocations. Such changes inthe pattern of resource allocations (i.e., firm strategies)would have an impact on firm performance insubsequent time periods. This study notes that theperiod of 2008 and 2009 is viewed as a recessionaryperiod and provides a quasi-experimental environmentfor the above research idea to be empirically tested.