When Your Problem Becomes My Problem: The Impact of Airline IT Disruptions on On-Time Performance of Competing Airlines
41 Pages Posted: 9 Mar 2018 Last revised: 24 Apr 2018
Date Written: January 26, 2018
We study the effect of firm disruptions on competitor performance in the presence of shared resources, and conditions under which competitors experience performance degradation. We propose that the impact of disruption is moderated by the routine complexity of both a disrupted firm and a competitor. We examine these questions in the context of the U.S. airline industry, leveraging four large IT outages from 2011-2016. Competitors’ flights which originated from, or were inbound to, a disrupted hub experienced significant changes in on-time performance, depending on the routine complexity of the disrupted airline. Performance deteriorated during the disruption of full-service carriers, but improved during that of a low-cost carrier. We also find that this effect is strongly moderated by the competitors’ routine complexity.
Keywords: Shared Resources, Routine Complexity, On-Time Performance, IT Disruption, Airlines
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