Resource Redeployment as an Entry Advantage in Resource-Poor Settings

88 Pages Posted: 29 Jul 2022 Last revised: 5 May 2023

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: May 4, 2023

Abstract

Scarcity of productive factors poses a challenge for firms entering underdeveloped regions. We develop a model in which incumbent firms can overcome scarcity of skilled human capital in local labor markets by redeploying workers from existing units. The model predicts that redeployment is more valuable when factor markets exhibit large differences in resource scarcity. Redeployment is also more valuable when output is highly sensitive to worker skill and is responsive to complementarities between labor and other inputs. Important implications are that redeployment can endow firms with superior resources and enable them to enter more markets. Data on sugar mills in Brazil, where a sudden demand boom incentivized expansion, corroborate the predictions. Our research identifies new mechanisms of value-creation from resource redeployment across factor markets.

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 (May 4, 2023). Georgetown McDonough School of Business Research Paper No. 4171420, 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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