Author Archives: Charlotteren

[11]. Growth As Reallocation: Industry-Level Correlations in Firm Growth Modes

Jagadeesh Sivadasan, Natarajan Balasubramanian, Ravi Dharwadkar and Charlotte Ren. February 10, 2025. Available at SSRN: https://ssrn.com/abstract=5131225 or http://dx.doi.org/10.2139/ssrn.5131225

Abstract: How firms grow is an important topic of investigation both from research and policy perspectives. In a recent paper (Sivadasan et al., 2025), we examined the economic importance of several important growth modes using a comprehensive and granular decomposition of firm employment growth. One of the important insights from that study was to reiterate that firm growth is a process of reallocation of resources (of human capital in that study) and that growth modes can be viewed as reallocation channels. In this note, we elaborate on that insight by providing some additional evidence on inter-sectoral variations in and correlations among growth modes. We briefly recast the results on overall growth modes from Sivadasan et al.(2025)(Table 1) to illustrate how growth modes can be viewed as reallocation channels. We then examine sector-level correlations among those modes and discuss the findings in the context of related literature in strategy and industrial organization.

Click here for the SSRN working paper.

[10]. How Do US Firms Grow? New Evidence from a Growth Decomposition

Jagadeesh Sivadasan, Natarajan Balasubramanian, Ravi Dharwadkar and Charlotte Ren. Strategic Management Journal, 2024, 46(1): 49-81. https://doi.org/10.1002/smj.3641

Research Summary. Although firms grow using many modes, studies typically examine individual modes, usually transactional. This impedes our understanding of the relative importance of growth modes, correlations amongst them, and their associations with competition and firm performance. To shed light on these aspects, we decompose employment growth in all U.S. firms (2004–2013) into seven modes. We find that organic modes such as opening or closing plants contribute more than transactional modes such as acquisitions and sell-offs, and that growth modes exhibit age-size differences and are generally positively correlated within firms. Trade competition in manufacturing increased closures and decreased acquisitions but had no effect on new units. Transactional growth positively correlates with future survival, unlike organic growth. Together, these findings expand our understanding of firm growth and compel us to view it as a composite of multiple modes.

Managerial Summary. Managers have many ways to grow a firm, but studies typically emphasize transactional modes such as acquisitions and selloffs. Using data on all US firms over 2004–2013, we study seven growth modes in an integrated and comprehensive model. We find that organic modes contribute more to growth than transactional modes, that young, large firms grow less relative to old, large firms, that when firms grow (shrink), they tend to grow (shrink) using multiple modes simultaneously and that growth modes vary in their association with competition. Importantly, transactional growth positively correlates with future survival, unlike organic growth. Together, these findings not only suggest that growth modes vary in their contribution to firm growth but also that they may differently influence subsequent performance.

[9]. Alliance Performance and Subsequent Make-or-Ally Choices: Evidence from the Aircraft Manufacturing Industry

Charlotte Ren, Louis Mulotte, Pierre Dussauge and Jay Anand. Strategic Management Journal, 2022, 43(11): 2382-2413. https://doi.org/10.1002/smj.3410.

Research Summary. We examine how the performance of a firm’s prior alliances influences its propensity to persist with the alliance mode or switch to independent operations in the context of new product introductions (NPIs). Drawing on the behavioral theory of the firm (BTOF), we argue that a firm’s alliance performance has a U-shaped effect on its likelihood of undertaking the subsequent NPI independently and that competitive intensity strengthens this U-shaped relationship. We also predict that firms with above-aspiration alliance performance are more likely to achieve breakthrough performance in the subsequent NPI if they switch to independence than if they continue to ally. Data on NPIs in the global aircraft manufacturing industry (1944–2000) support our hypotheses. Our study extends the alliance literature and contributes to research on how firm performance influences subsequent strategic choices.

Managerial Summary. The dilemma of whether to continue or exit an alliance or relationship is a common one for individuals, countries, and firms. Our study examines firms’ strategic decision to switch to independent operations after having partnered with other firms. Using the aircraft product development context, we show that firms that make such a change in their strategy are the ones that performed either much better or much worse than what they expected. Firms with alliance performance close to their expectations tend to persist with their current strategy. Of the firms that change their strategy, the high performers benefit much more from changing their strategy than low performers. We provide insights regarding when it is preferable for managers to continue to ally or to switch to independence, especially in launching new products.

Click here for the paper: Ren.Mulotte.Dussauge.Anand_2022 SMJ.

[8]. Responding to Diffused Stakeholders on Social Media: Connective Power and Firm Reactions to CSR-Related Twitter Messages

Gregory Saxton, Charlotte Ren and Chao Guo. Journal of Business Ethics, 2021, 172: 229-252. https://doi.org/10.1007/s10551-020-04472-x 

Abstract. Social media offers a platform for diffused stakeholders to interact with firms—alternatively praising, questioning, and chastising businesses for their CSR performance and seeking to engage in two-way dialogue. In 2014, 163,402 public messages were sent to Fortune 200 firms’ CSR-focused Twitter accounts, each of which was either shared, replied to, “liked,” or ignored by the targeted firm. This paper examines firm reactions to these messages, building a model of firm response to stakeholders that combines the notions of CSR communication and stakeholder salience. Our findings show that firm response to a stakeholder on social media is positively and most significantly associated with what we refer to as the stakeholder’s connective power but negatively associated with the firm’s own connective power. To a lesser extent, firm response is positively associated with the stakeholder’s normative power but negatively associated with the firm’s own normative power. Firm response is also shown to be positively associated with stakeholder urgency in terms of both the originality of a stakeholder message and the expression of positive sentiment.

Click here for the paper: Saxton.Ren.Guo_2021 JBE.

[7]. Responses to Rival Exit: Product Variety, Market Expansion, and Preexisting Market Structure

Charlotte Ren, Ye Hu and Tony H. Cui. Strategic Management Journal. 2019, 40(2): 253-276.

Research Summary. This study investigates incumbent responses to a main rival’s exit. We argue that long‐time rivals have developed an equilibrium by offering a mix of overlapping and unique products and by choosing geographic proximity to each other. A rival’s exit, however, disrupts this equilibrium and motivates surviving firms to expand in both product and geographic spaces to seek a new equilibrium. Using data from all U.S. Best Buy stores before and after the exit of Circuit City, we find that Best Buy uses product variety expansion as its major response in markets where Circuit City was colocated, but it more often responds by opening new stores in non‐colocated markets. Regardless of preexisting market structures, the magnitude of product variety expansion decreases with the opening of new stores.

Managerial Summary. How do surviving firms respond to a major rival’s exit? By studying Best Buy’s responses to Circuit City’s withdrawal, we find the survivor expands in both product space (increasing product variety) and geographic space (opening new stores), due to two motives. First, the survivor strives to fill in “holes” left in the market. Second, the survivor experiences uncertainty in the post‐exit world wherein its reference point is gone, threat of potential entry looms, and it lacks information about new entrants. Thus, it must deter potential entry ex ante by preempting many prime product and geographic locations. Best Buy also responds according to preexisting market structures, primarily through product variety expansion in markets wherein Circuit City was colocated and through opening new stores in non‐colocated markets.

Click here for the Ren.Hu.Cui 2019 SMJ Paper.

[6]. Should I stay or should I go now? Integrating the learning and selection views on firms’ successive make-or-ally decisions for product innovation

Louis Mulotte, Charlotte Ren, Pierre Dussauge and Jay Anand. In F. Contractor and J. Reuer (Eds). Frontiers of Strategic Alliance Research. Cambridge University Press. 2019 (pp. 423-436).

Abstract. Previous literature on inter-firm collaborations has documented how firms can learn from their partners with experience and eventually develop adequate capabilities to go it alone. On the other hand, some literature also suggests that firms are less likely to switch from previously successful strategies, so firms with successful collaborative experience may persist with further collaborations. We identify these strands of literature as the “learning” and “selection” views, and develop propositions on the implications of the two alternative views. We conduct preliminary tests of our propositions using data on new product introductions in the aircraft industry. Our theoretical and empirical analyses help in integrating of these seemingly opposing views and allow for the development of theoretical and managerial implications.

[5]. Does experience imply learning?

Jay Anand, Louis Mulotte and Charlotte Ren. Strategic Management Journal. 2016, 37(7): 1395-1412. 

Abstract. Strategic management research traditionally uses experiential learning arguments to explain the existence of a positive relationship between repetition of an activity and superior performance. We propose an alternative interpretation of this relationship in the context of discrete corporate development activities, which are generally self-selected on the basis of superior performance expectations. We argue that firms are likely to choose to repeat successful activities, thereby accumulating high experience with them. To demonstrate this ‘self-selection’ effect, we examine the performance of 437 aircraft projects launched through three introduction modes. We show that the positive performance effect of the firm’s experience with the focal mode vanishes after accounting for experience endogeneity. We suggest that in a general case, experience with corporate development activities may be tinged with both learning as well as selection effects. Therefore, omitting experience endogeneity may lead researchers to draw incorrect conclusions from an “empirically observed” positive experience-performance relationship.

Click here for the paper: Anand-Mulotte-Ren_2016 SMJ

[4]. Disentangling the Performance Effects of Efficiency and Bargaining Power in Horizontal Growth Strategies: An Empirical Investigation in the Global Retail Industry

Valerie Moatti, Charlotte Ren, Jay Anand and Pierre Dussauge. Strategic Management Journal. 2015, 36(5): 745-757.

Abstract. M&A and organic growth are two common strategies for firms to achieve horizontal growth. In this study, we disentangle two distinct sources of firm performance corresponding to different theoretical perspectives on firm size: firms’ bargaining power with respect to suppliers and customers, and operating efficiency arising from scale economies. We conceptually argue and empirically show that relatively, M&A enhance bargaining power while organic growth enhances operating efficiency. We also find that M&A’s disadvantage on operating efficiency persists over time. In order to disaggregate these effects, we use accounting rather than financial or managerial data and test our predictions in the global retail industry over a 20 year period. We examine implications of these results for sustainability of size-based competitive advantages.

Click here for the paper: Moatti-Ren-Anand-Dussauge 2015SMJ

[3]. Middle Managers’ Strategic Role in the Corporate Entrepreneurial Process: Attention-Based Effects

Charlotte Ren and Chao Guo. Journal of Management. 2011, 37(6): 1586-1610

  • An earlier version of this manuscript received the 2008 IDEA Award (Research Promise) from the AOM’s Entrepreneurship Division.

Abstract. This article examines the strategic role of middle managers in the corporate entrepreneurial process from an attention-based perspective. By integrating literature from multiple disciplines, the authors delineate the attention-based effects on how middle managers provide the impetus for different types of entrepreneurial opportunities (i.e., exploratory vs. exploitative initiatives). Specifically, middle managers, constrained by the attention structures of the firm, likely pre-screen entrepreneurial opportunities from lower organizational levels and attend primarily to those that align with the strategic orientation of the firm. This tendency may be moderated by the presence of other players, middle managers’ structural positions, and the availability of slack resources. Moreover, in their efforts to sell initiatives to top management, middle managers may leverage “policy windows”—patterned regularities and irregularities in and around the organization—to exploit existing attention structures to their advantage or perhaps to dismantle those structures.

Click here for the paper: Ren&Guo_2011JOM Online Pub

[2]. Managing Product Variety and Collocation in a Competitive Environment: An Empirical Investigation of Consumer Electronics Retailing

Charlotte Ren, Ye Hu, Yu (Jeffrey) Hu and Jerry Hausman. Management Science. 2011, 57(6): 1009-1024.

Abstract. Product variety is an important strategic tool that firms can use to attract customers and respond to competition. This study focuses on the retail industry and investigates how stores manage their product variety, contingent on the presence of competition and their actual distance from rivals. Using a unique data set that contains all Best Buy and Circuit City stores in the United States, the authors find that a store’s product variety (i.e., number of stock-keeping units) increases if a rival store exists in its market but, in the presence of such competition, decreases when the rival store is collocated (within one mile of the focal store). Moreover, collocated rival stores tend to differentiate themselves by overlapping less in product range than do non-collocated rivals. This smaller and more differentiated product variety may be because of coordinated interactions between collocated stores. In summary, this paper presents evidence of both coordination and competition in retailers’ use of product variety.

Click here for the paper: Ren-Hu-Hu-Hausman 2011MS (SSRN Version).

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