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

See all articles by Jörg Claussen

Jörg Claussen

Ludwig Maximilian University of Munich - Faculty of Business Administration (Munich School of Management); Copenhagen Business School - Department of Innovation and Organizational Economics

Christian Essling

CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute

Christian Peukert

Universidade Catolica Portuguesa

Date Written: July 17, 2018

Abstract

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

Claussen, Jörg and Essling, Christian and Peukert, Christian, Demand Variation, Strategic Flexibility and Market Entry: Evidence from the U.S. Airline Industry (July 17, 2018). Strategic Management Journal, 39 (11), 2018, 2877-2898. Available at SSRN: https://ssrn.com/abstract=2410765 or http://dx.doi.org/10.2139/ssrn.2410765

Jörg Claussen (Contact Author)

Ludwig Maximilian University of Munich - Faculty of Business Administration (Munich School of Management) ( email )

Kaulbachstr. 45
Munich, DE 80539
Germany

Copenhagen Business School - Department of Innovation and Organizational Economics ( email )

Kilevej 14A
Frederiksberg, 2000
Denmark

Christian Essling

CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute ( email )

Poschinger Str. 5
Munich, 01069
Germany

Christian Peukert

Universidade Catolica Portuguesa ( email )

Portugal

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