Intended rationality in exit decisions

The organizational field of rivals as a source of signal in segment exit decisions by Korean SI ventures, 2000–2006

Dong Youb Shin, Sunhyuk Kim, Kiwon Jung

Research output: Contribution to journalArticle

Abstract

This paper examines how the aggregated actions of rivals belonging to the same organizational field affect a firm’s exits from existing market segments. We argue that while a firm’s exit decisions are strongly influenced by the aggregated actions by other firms which may serve as an uncertainty-reducing signal, the focal firm’s strategic responses to signals from the organizational field of rivals are more complicated, informed, and rational, than is usually suggested. For instance, in its evaluation of signals about segment attractiveness based on the aggregated actions of rivals, the focal firm will give different weights to rivals’ actions according to the strength of competitive threat, will make refined inferences about the attractiveness of a segment based on the performances of rivals, and will give a greater weight to recent actions by rivals than to older ones. The results of our event history analysis of all segment exits by Korean SI ventures support all our hypotheses.

Original languageEnglish
Pages (from-to)398-421
Number of pages24
JournalAustralian Journal of Management
Volume41
Issue number2
DOIs
Publication statusPublished - 2015 Jan 1

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Rationality
Venture
Organizational field
Exit
Attractiveness
Firm exit
Threat
Strategic response
Uncertainty
Evaluation
Market segments
Event history analysis
Inference

All Science Journal Classification (ASJC) codes

  • Business, Management and Accounting(all)

Cite this

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