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Risky business: How strategy relates to survival
Author(s) -
Thornhill Stewart,
White Roderick E.,
Raynor Michael E.
Publication year - 2021
Publication title -
canadian journal of administrative sciences / revue canadienne des sciences de l'administration
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.347
H-Index - 48
eISSN - 1936-4490
pISSN - 0825-0383
DOI - 10.1002/cjas.1609
Subject(s) - robustness (evolution) , adaptability , business failure , longitudinal data , strategic management , function (biology) , business , actuarial science , economics , operations management , marketing , computer science , management , finance , data mining , biochemistry , chemistry , evolutionary biology , biology , gene
This research explores the relationship between business strategy and survival. Seven annual panels of longitudinal data enable us to study riskiness (likelihood of failure) as a function of business strategy. We find failure rates are higher for those businesses with purer strategy positions. Two mechanisms are offered as potential explanations for this result: robustness and adaptability. While prior research has found pure strategies have higher returns, our findings suggest that pursuing a hybrid strategy may be an entirely reasonable choice, balancing risk and return.