Resource Redeployment as an Entry Advantage in Resource-Poor Settings

72 Pages Posted: 29 Jul 2022

See all articles by Jasmina Chauvin

Jasmina Chauvin

Georgetown University

Carlos Inoue

The University of Illinois at Urbana-Champaign

Christopher Poliquin

UCLA Anderson School of Management

Date Written: June 30, 2022

Abstract

Scarcity of productive factors poses a challenge for firms entering underdeveloped regions. We examine resource redeployment as a strategy to overcome scarcity in factor markets by modeling when expanding firms will internally redeploy versus hire workers via external markets. Our model predicts that redeployment is most valuable when there are large differences in resource scarcity across factor markets and when output is highly sensitive to worker skill and complementarities between labor and other resources. The ability to overcome resource scarcity allows firms with redeployment capabilities to enter markets that other firms would not. Data on sugar mills in Brazil, where a sudden demand boom incentivized expansion, corroborate the predictions. Our research identifies new entry advantages from resource redeployment.

Keywords: resource redeployment, strategic factor markets, labor market thickness, human capital, market entry

Suggested Citation

Chauvin, Jasmina and Inoue, Carlos and Poliquin, Christopher, Resource Redeployment as an Entry Advantage in Resource-Poor Settings (June 30, 2022). Available at SSRN: https://ssrn.com/abstract=4171420 or http://dx.doi.org/10.2139/ssrn.4171420

Jasmina Chauvin (Contact Author)

Georgetown University ( email )

3700 O Street, NW
Washington, DC 20057
United States

Carlos Inoue

The University of Illinois at Urbana-Champaign ( email )

Christopher Poliquin

UCLA Anderson School of Management ( email )

110 Westwood Plaza
Los Angeles, CA 90095
United States

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