Bottleneck Resources, Market Relatedness, and the Dynamics of Organizational Growth

58 Pages Posted: 25 Nov 2014 Last revised: 13 Jan 2020

See all articles by Sungyong Chang

Sungyong Chang

London Business School; Columbia University - Columbia Business School, Management

J. P. Eggers

New York University (NYU) - Leonard N. Stern School of Business

Daniel Keum

Columbia University - Columbia Business School

Date Written: December 30, 2019

Abstract

Entering a new product market requires assembling a bundle of technological and market resources. Because missing a single resource may foil the entire entry effort, we argue that bottleneck resources – those most difficult to obtain or sell externally – anchor the direction of firm growth. We characterize market resources as bottlenecks because they are (on average) more challenging to obtain and sell than technological resources, and articulate why the importance of market resources varies with the strength of external markets for technology. Using cross-industry data linking firms’ product information with their patent portfolio, we find resource dynamics whereby market resources drive the strategic decision to enter, and firms use both external and internal development to fill technological gaps in their portfolio.

Keywords: product market entry, diversification, resource-based view, demand-side strategy, markets for technology

JEL Classification: L10, M21, O30

Suggested Citation

Chang, Sungyong and Eggers, J. P. and Keum, Daniel, Bottleneck Resources, Market Relatedness, and the Dynamics of Organizational Growth (December 30, 2019). Columbia Business School Research Paper No. 14-60, Available at SSRN: https://ssrn.com/abstract=2530263 or http://dx.doi.org/10.2139/ssrn.2530263

Sungyong Chang (Contact Author)

London Business School ( email )

Sussex Place
Regent's Park
London, London NW1 4SA
United Kingdom

Columbia University - Columbia Business School, Management ( email )

3022 Broadway
New York, NY 10027
United States

J. P. Eggers

New York University (NYU) - Leonard N. Stern School of Business ( email )

44 West 4th Street
Suite 9-160
New York, NY NY 10012
United States

Daniel Keum

Columbia University - Columbia Business School ( email )

3022 Broadway
New York, NY 10027
United States

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