Demand Variation, Strategic Flexibility and Market Entry: Evidence from the U.S. Airline Industry
Strategic Management Journal, 39 (11), 2018, 2877-2898
35 Pages Posted: 19 Mar 2014 Last revised: 12 Oct 2018
Date Written: July 17, 2018
Entry into dynamic environments can be challenging for firms. We study if, and under which circumstances, firms can use strategic flexibility to enter markets with variable demand. In the airline industry, we find broad support for our hypotheses. We observe less entry with more demand variation, more entry of more flexible firms, and that more flexible firms are more likely to enter markets with greater variation in demand. Furthermore, we find that this relationship is especially strong when variation in demand is harder to predict, which suggests that strategic flexibility is most valuable in unpredictable turbulent environments.
Keywords: Market Entry, Flexibility, Uncertainty, Airline Industry
JEL Classification: C10, L10, L13, L93
Suggested Citation: Suggested Citation