Abstract Research SummaryDespite the importance of resource reallocation in shaping a variety of strategic outcomes, strategy scholars have paid only limited attention to the processes by which firms reallocate their resources across successive systemic innovations. To explore these processes, we conducted an in‐depth historical case study on Rolls‐Royce's role in three distinct systemic innovations that marked the transition from piston engines to jet engines in the civil aviation industry: the turbojet, the turboprop, and the turbofan. The analysis helps explain how and why Rolls‐Royce's central role stemmed from its ability to reallocate existing non‐scale free organizational and technical resources. A key finding of this study is the identification of the horizontal transfer of functional modules as a critical process, especially during the incipient phase of a systemic innovation. The analysis also highlights the role that specific organizational arrangements, particularly a firm's integrative capabilities, have in shaping the effectiveness with which resources are reallocated.Managerial SummaryFocusing on resource reallocation is important to understand why some firms effectively reallocate their resources through successive systemic innovations while others cannot, even if they have similar resources and face the same environmental conditions. By delving into the technological aspects of aeroengine development and exploring why Rolls‐Royce had the capabilities to successfully integrate key functional modules across various modular levels, we clarify the relationship between technology and organization that underlies resource reallocation—a topic that has received only scant attention in the strategy literature.

Abstract Research Summary Platforms create value by connecting users to complementors offering goods or services. Complementors compete on platforms but may also benefit each other by drawing demand to the platform, which may then “spillover” from one complementor to another. This tension raises the question: When are relationships between complementors competitive versus complementary? To help address this question, I apply theory on agglomeration‐driven demand spillovers to examine when on‐platform demand spillovers created by peer product launch are larger versus smaller. Studying the Spotify platform, I find spillovers are larger, and peer album release more beneficial to an artist, when the peer stimulates greater demand expansion, platform‐mediated inter‐complementor proximity is higher, and the artist benefits more from consumer learning. Findings extend literature on on‐platform competition and inform complementor strategy. Managerial Summary On digital platforms, complementor product launch may hurt peer performance by causing substitution or may benefit peer performance by drawing demand to the platform which may then “spillover” from the complementor to a peer. Studying the Spotify platform, I examine when such spillovers are larger versus smaller, shedding light on when peer product launch is beneficial versus detrimental for complementors competing on digital platforms. On Spotify, demand spillovers are larger, and peer album release more beneficial to an artist, when peer album release draws listeners to the platform, Spotify recommendations connect the artist to the peer, and the artist reaches new or unfamiliar listeners. The findings suggest that, on platforms featuring demand spillovers, complementors can take strategic actions to leverage spillovers and improve performance.

Abstract Research SummaryScarcity of productive factors poses a challenge for firms entering underdeveloped regions. We theorize that incumbent firms can overcome scarcity of skilled human capital in local labor markets by redeploying workers from existing units. We predict 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 a new mechanism of value‐creation from resource redeployment across factor markets.Managerial SummaryFirms entering underdeveloped regions often struggle to obtain inputs needed for production, such as skilled labor. We propose that incumbent firms expanding into such regions can overcome resource scarcity by redeploying resources from their existing units. Redeployment allows firms to move resources—such as skilled workers—from markets where resources are relatively abundant to markets where they are scarce. We show that such factor market “arbitrage” is most valuable when firms operate across markets with large differences in resource scarcity and when production is sensitive to worker skill and to complementarities between inputs. By redeploying into markets suffering from resource scarcity, firms can enter more markets and seed units with superior resources. This gives incumbent firms with redeployment capabilities an advantage over de novo entrants.

Abstract Research Summary External representations, particularly visuals, are important in strategic decision‐making. However, their pervasiveness and impact are not well understood in the strategy literature. Based on cognitive science research, we identify four cognitive functions crucial to strategic decision‐making that benefit from using external representations. We also propose a conceptual model and propositions that explain how the quality of strategic decision‐making depends on the interactions among task environment, external representations, and managers. We show that external representations influence in predictable ways the boundedly rational process of searching for new strategies. Key determinants include the manager's representational capability and the usability and malleability of the external representation. We discuss implications for users, designers, and teachers of external representations in strategy, as well as suggest avenues for future research. Managerial Summary This research points to the pivotal role of external representations, especially visuals, in strategic decision‐making. Drawing from cognitive science, this study identifies four critical cognitive functions that benefit from these external representations—working memory, long‐term memory, pattern recognition, and knowledge transfer. Further, the study highlights that external representations significantly influence the process of strategic decision‐making in predictable ways. Finally, we show that not all external representations are alike in their ease of use and a managers' ability to operate on an external representation, referred to as representational capability, greatly affects the decision‐making quality. The implications extend to users, designers, and educators of external representations, urging attention to the design and use of external representations for improved decision outcomes.

Abstract Research Summary While previous organizational impression management (OIM) research focuses on highlighting firms in a favorable light, we explore CEOs' use of “strategic negativity” to manage expectations. We draw on OIM's psychological roots to predict that despite pressure to “be positive,” when CEOs perceive stakeholders are motivated to raise their expectations and have an opportunity to do so, CEOs strategically use negativity to counteract this anticipated expectation increase. We test our predictions on 7330 quarterly earnings calls from 370 publicly traded firms (2008–2019), examining how the “motive” of a positive material earnings surprise and “opportunity” of a new fiscal year jointly increase CEO negativity in prepared remarks. We elaborate the wide applicability of strategic negativity, the “other side” of the OIM phenomenon. Managerial Summary In contrast to the prevailing view that CEOs usually “positively spin” the firm's situation to stakeholders, we investigate how CEOs strategically use negativity to counteract stakeholder optimism, provided CEOs perceive expectations are likely to rocket upward. We argue that positive news represents a “motive” and a chance to reflect represents an “opportunity,” and that together they risk raising expectations. Analyzing 7330 quarterly earnings calls of 370 companies (2008–2019), we specifically examined how both (1) a positive earnings surprise and (2) a new fiscal year force CEOs out of their positivity comfort zone and encourage them to be strategically negative in earnings call remarks, to try to lower stakeholder expectations. Our results support this view and pave the way for future research.

Abstract Research Summary Recognizing the role of complementors in creating value in interdependent platform ecosystems, strategy research has recently started to examine performance heterogeneity across complementors. However, research has thus far focused on the performance implications of dynamics unfolding within a particular ecosystem. We take a step toward exploring influences that arise beyond the focal ecosystem by focusing conceptually on multihoming. We argue that multihoming to another platform produces learning benefits that enhance a complementor's performance on the home platform, especially when dealing with a high level of interdependencies and having greater similarity to other complements. We find supportive evidence in our analysis of open‐source software platforms between 2012 and 2018 and discuss implications for research on platform ecosystems, multihoming, and open‐source software. Managerial Summary Prior studies viewed multihoming as an important strategy for complementors in platform ecosystems. However, little is known about the extent to which such expansion affects the performance of complementors on their home platforms. This study investigates this issue using data on software package complementors in a variety of platforms housed in GitHub, the world's largest repository of open‐source software. The findings show that following multihoming, a complementor experiences a performance improvement in the home platform even when compared to the performance change observed during the same period for another complementor with similar attributes but that remains in single‐homing. These findings underscore the strategic implications of multihoming as a significant driver of performance heterogeneity across complementors in platform ecosystems.

Abstract Research Summary This article investigates how job seekers' perceptions of an employer's formal hierarchy affect the size and gender composition of its applicant pool. Building on the literature on gendered organizations and organizational design, we develop opposing perspectives on these relationships. To arbitrate between these perspectives, we first conduct a field experiment in partnership with a hiring firm. We find that featuring a flatter hierarchy in recruiting materials does not significantly affect the size of the applicant pool, but significantly decreases women's representation within it. Our follow‐up survey experiment identifies several potential mechanisms (e.g., perceptions of career progression, informality, workload, and fit). Our findings imply that firms' growing tendency to adopt flatter hierarchies could inadvertently undermine efforts to attract a greater proportion of women applicants. Managerial Summary Using a pair of labor market experiments, this study finds that characterizing a hiring firm's hierarchy as “flatter” with fewer management levels reduces women's representation in the applicant pool. We show that this decrease in the share of women applicants is likely driven by the fact that women, compared to men, perceive flatter hierarchies as more likely to present difficulties in fitting in, burden them with more work, and provide fewer opportunities for career progression. These findings suggest that, to mitigate workplace gender segregation, organizations with flatter structures may benefit from de‐emphasizing their organizational hierarchies in recruitment efforts. Moreover, companies should consider how their organizational attributes contribute to fostering a more inclusive work environment.

Abstract Research Summary Startups are increasingly turning to incumbent firms for venture capital, anticipating access to the investor's knowledge and complementary assets. However, startups' eventual access to these resources varies widely. This article highlights one important driver of such variance, whether startups' managers were previously employed by an incumbent in the same industry. Using data from the life sciences, I find that such corporate experience can precipitate technical knowledge flows to startups by enabling the generation of relational capital with incumbent firm managers. It also helps startups navigate incumbents' decision‐processes to formalize access to downstream complementary assets via alliances. The former effect is stronger when corporate experience is technology‐focused, the latter when it is commercialization‐focused. Corporate experience at the investing incumbent firm amplifies informal knowledge‐flows but not formal alliances. Managerial Summary Startups typically expect corporate venture capital investors to facilitate access to resources these investors' parent companies control. However, such resource‐access often does not materialize, with startups struggling to navigate the large, complex organizations within which these resources are located. I identify an important driver of variance in such resource‐access. Prior experience working in an established company in the same industry enhances startup leaders' ability to informally tap into corporate investors' technical knowledge, and to formalize alliances to access corporate investors' go‐to‐market assets. Technology‐focused experience is especially helpful with the former, and commercialization‐focused experience with the latter. Such access is more likely to enable exit for the startup if the established firm has direct experience in the specific product markets the startup is focusing on.

Abstract Research Summary We examine to what extent and when multiunit firms internally redeploy managers between units. While theory has emphasized how changes in demand conditions affect redeployment, we argue that optimal internal resource allocation involves consideration of both demand and each unit's resource supply. We formalize this argument, showing how redeployment arises from “supply‐side inducements”—return advantages in new over existing resource uses resulting from changes in resource supply. Empirical tests using manager deaths as an exogenous, supply‐side shock to firms' resource stocks support our arguments, showing that firms frequently redeploy resources away from better‐endowed and toward negatively affected units. Incorporating supply‐side inducements into redeployment theory implies additional value‐creation opportunities from redeployment and carries novel predictions for the direction of intra‐firm resource flows. Managerial Summary Firms continuously decide how to allocate valuable resources—such as their most productive workers, unique inputs, or machinery—among different units. We argue that to optimally allocate such resources, managers must respond to changes in both the demand environment and in the resource stock of different units. When some units successfully accumulate resources while others suffer adverse shocks, opportunity exists to improve efficiency by internally redeploying resources. Counterintuitively, optimal redeployment frequently involves shifting resources away from successful, well‐endowed units. New business units, being resource‐poor, are often the most important recipients of resources. Empirical analyses studying how firms allocate managers in a large sample of Brazilian firms offer support for these arguments.