Strategic factor markets: expectations, luck, and business strategy
Management Science
Asset stock accumulation and sustainability of competitive advantage
Management Science
Entrepreneurial Resources, Organizational Choices, and Competitive Outcomes
Organization Science
Organizational Design and the Intensity of Rivalry
Management Science
Management Science
The Timing of Resource Development and Sustainable Competitive Advantage
Management Science
Entrepreneurial Optimism in the Market for Technological Inventions
Organization Science
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This paper uses a formal model to study how evaluation costs affect competition for resources in strategic factor markets. It finds that relative scarcity may not always benefit resource sellers. Rather, when competition among resource investors passes a certain threshold intensity, miscoordination among investors increases to the point that sellers' expected profits decline. This paper extends the model to consider how investors organize to overcome managerial agency in resource evaluation. Two organizational designs are considered: (a) incentivization, wherein a lower-level manager is motivated by an incentive contract to evaluate resources for an investor, and (b) supervision, wherein evaluation is either handled directly or closely monitored by headquarters. The model suggests that competition among investors will be associated with a greater use of supervision and that investors using supervision will tend to make lower offers. This paper also finds that supervision will be more common when valuable resources are rare. This paper was accepted by Bruno Cassiman, business strategy.