THREE ESSAYS by Tuhin Chaturvedi BE, Visvesw
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CORPORATE DEVELOPMENT AS AN ADAPTIVE MECHANISM IN EVOLVING TECHNOLOGY ECOSYSTEMS: THREE ESSAYS by Tuhin Chaturvedi B.E., Visveswariah Technological University, 2005 MSc., The University of Warwick, 2009 Submitted to the Graduate Faculty of Joseph M. Katz Graduate School of Business in partial fulfillment of the requirements for the degree of Doctor of Philosophy in Strategic Management University of Pittsburgh 2018 UNIVERSITY OF PITTSBURGH JOSEPH M. KATZ GRADUATE SCHOOL OF BUSINESS This dissertation was presented by Tuhin Chaturvedi It was defended on April 12, 2018 and approved by Ravi Madhavan, Ph.D., Professor of Business Administration Katz Graduate School of Business, University of Pittsburgh Susan K. Cohen, Ph.D., Associate Professor of Business Administration Katz Graduate School of Business, University of Pittsburgh Yu Cheng, Ph.D., Associate Professor of Statistics, Department of Statistics, University of Pittsburgh Tsuhsiang Hsu, Ph.D. Assistant Professor of Management, Mihaylo College of Economics and Business, California State University, Fullerton Dissertation Advisor: John E. Prescott, Ph.D., Thomas O’Brien Chair of Strategy, Katz Graduate School of Business, University of Pittsburgh ii Copyright © by Tuhin Chaturvedi 2018 iii CORPORATE DEVELOPMENT AS AN ADAPTIVE MECHANISM IN EVOLVING TECHNOLOGY ECOSYSTEMS: THREE ESSAYS Tuhin Chaturvedi, Ph.D. University of Pittsburgh, 2018 As contemporary business environments across the globe are increasingly affected by the advent of disruptive technologies, several technology ecosystems are in a consistent state of flux driven by the fast paced and discontinuous nature of technological change. This dissertation addresses the adaptive role of firms’ corporate development decisions in these dynamic and fast changing environments. I theorize on and empirically evaluate the role of four corporate development decisions – internal development, alliances, acquisitions and divestitures as adaptive mechanisms towards improving the likelihood of survival in evolving technology ecosystems. This dissertation examines how corporate development decisions exert an adaptive influence on strategic decisions taken at the product portfolio level (essay one), firm level (essay two) and transaction level (essay three). Each essay focuses on a unique challenge that accosts managers in evolving technology ecosystems – product configuration (essay one), corporate growth (essay two) and technology driven inertia (essay three). Also, each essay proposes that corporate development decisions contribute to the adaptive behavior of firms in different ways and hence, they represent strategic alternatives through which managers can overcome these challenges to enhance the likelihood of survival of their firms in evolving technology ecosystems. iv TABLE OF CONTENTS PREFACE....................................................................................................................................xii 1. INTRODUCTION.................................................................................................................... 1 1.1 ESSAY ONE- SURVIVING THE “LIABILITY OF FERMENT” IN AN ERA OF FERMENT – THE MODERATING ROLE OF CORPORATE SCOPE.......................... 5 1.2 ESSAY TWO - “PROLIFERATE AND MOBILIZE” – HOW FIRMS EXPLORE AND EXPLOIT THROUGH GROWTH MODES TO SURVIVE IN EVOLVING TECHNOLOGY ECOSYSTEMS.......................................................................................... 7 1.3 ESSAY THREE - “REINFORCE, ATTENUATE, RECONCILE” – HOW RESOURCE RECONFIGURATION THROUGH CORPORATE SCOPE DECISIONS OVERCOMES THE INERTIA OF A LEGACY TECHNOLOGY ORIENTATION.... 11 1.4 CONTRIBUTION AND MANAGERIAL IMPLICATIONS...................................... 14 2. ESSAY ONE: SURVIVING THE “LIABILITY OF FERMENT” IN AN ERA OF FERMENT – THE MODERATING ROLE OF CORPORATE SCOPE........................ 18 2.1 INTRODUCTION........................................................................................................... 18 2.2 THEORY AND HYPOTHESES.................................................................................... 23 2.2.1 Feature implementation gap and product market survival............................ 23 2.2.2 The moderating role of corporate scope decisions and the feature implementation gap..................................................................................................... 27 2.2.3 Scope expanding decision – Firm alliancing activity....................................... 27 v 2.2.4 Internal development – Feature specific knowledge breadth......................... 30 2.2.5 Internal development – Feature specific knowledge depth............................. 32 2.2.6 Scope expanding decision – Firm acquisition activity..................................... 34 2.3 EMPIRICAL CONTEXT, DATA AND METHODOLOGY...................................... 36 2.3.1 Empirical context................................................................................................ 36 2.3.2 Data...................................................................................................................... 37 2.3.3 Dependent variable............................................................................................. 38 2.3.4 Independent variable.......................................................................................... 38 2.3.5 Moderator variables........................................................................................... 40 2.3.6 Control variables................................................................................................. 41 2.3.7 Empirical methodology...................................................................................... 41 2.3.8 Endogeneity concerns......................................................................................... 45 2.4 RESULTS....................................................................................................................... 47 2.4.1 Robustness checks.............................................................................................. 57 2.5 DISCUSSION................................................................................................................ 59 2.5.1 Contribution...................................................................................................... 60 2.5.2 Managerial implications................................................................................... 64 2.5.3 Limitations and future research directions.................................................... 65 2.6 CONCLUSION............................................................................................................ 67 3. ESSAY TWO - “PROLIFERATE AND MOBILIZE” – HOW FIRMS EXPLORE AND EXPLOIT THROUGH GROWTH MODES TO SURVIVE IN EVOLVING TECHNOLOGY ECOSYSTEMS......................................................................................... 69 3.1 INTRODUCTION............................................................................................................ 69 vi 3.2 THEORY AND HYPOTHESES..................................................................................... 74 3.2.1 Growth orientation, technological change and firm failure............................. 74 3.2.2 Corporate development decisions as exploratory and exploitative growth modes..................................................................................................................... 77 3.2.3 The internal development growth mode............................................................ 79 3.2.4 The alliance activity growth mode...................................................................... 81 3.2.5 The acquisition activity growth mode................................................................ 84 3.2.6 The divestiture activity growth mode................................................................ 87 3.3 EMPIRICAL CONTEXT, DATA AND METHODOLOGY....................................... 90 3.3.1 Empirical context................................................................................................. 90 3.3.2 Data....................................................................................................................... 92 3.3.3 Dependent variable.............................................................................................. 92 3.3.4 Independent variable........................................................................................... 93 3.3.5 Moderator variables............................................................................................ 95 3.3.6 Control variables.................................................................................................. 98 3.3.7 Empirical methodology....................................................................................... 98 3.3.8 Endogeneity concerns.......................................................................................... 99 3.4 RESULTS........................................................................................................................ 104 3.4.1 Supplementary analyses..................................................................................... 114 3.4.2 Robustness checks............................................................................................... 116 3.5 DISCUSSION.................................................................................................................. 118 3.5.1 Contribution......................................................................................................