Time Compression (Dis)Economies: An Empirical Analysis

Strategic Management Journal, Forthcoming

HEC Paris Research Paper No. SPE-2018-1283

50 Pages Posted: 23 Jun 2018 Last revised: 8 Jul 2018

See all articles by Ashton Hawk

Ashton Hawk

Leeds School of Business, University of Colorado Boulder

Gonçalo Pacheco-de-Almeida

HEC Paris - Strategy & Business Policy

Date Written: March 20, 2018

Abstract

To investigate time compression dis-economies (TCD), this study estimated time-cost elasticities using 459 oil and gas global investment projects (1997-2010). Results show that the average cost of accelerating investments is negative: a firm could cut $6.3 million in costs of a single project by accumulating asset stocks one month faster. About 88 percent of the projects exhibit negative time-cost elasticities with over 39 percent of unrealized economies of time compression. Only 12 percent of the projects are subject to TCD. These time inefficiencies or frictions do not negate the existence of TCD, but suggest they are less prevalent than assumed in the literature. Management experience, R&D investment, firm size, economic development and political stability are shown to be associated with greater time compression efficiency.

Keywords: Sustainable Competitive Advantage, Temporal Frictions, Time Compression Diseconomies, Time Inefficiencies, Time-Cost Tradeoff

JEL Classification: D22, D24, L71, M11, M20

Suggested Citation

Hawk, Ashton and Pacheco-de-Almeida, Gonçalo, Time Compression (Dis)Economies: An Empirical Analysis (March 20, 2018). Strategic Management Journal, Forthcoming ; HEC Paris Research Paper No. SPE-2018-1283. Available at SSRN: https://ssrn.com/abstract=3193388

Ashton Hawk

Leeds School of Business, University of Colorado Boulder ( email )

United States

Gonçalo Pacheco-de-Almeida (Contact Author)

HEC Paris - Strategy & Business Policy ( email )

Jouy-en-Josas Cedex, 78351
France
(+33) (0)1 39 67 97 62 (Phone)

HOME PAGE: http://www.hec.edu/Faculty-Research/Faculty-Directory/PACHECO-DE-ALMEIDA-Goncalo

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