European Business Schools Librarian's Group

Les Cahiers de Recherche,
HEC Paris

No 987: Resolving the Commitment vs. Flexibility Trade-Off: The Role of Resource Accumulation Lags

Gonçalo Pacheco-de-Almeida (), James E. Henderson () and Karel Cool ()

Abstract: We examine how time-consuming resource accumulation influences the classic strategy trade-off between commitment and flexibility. In particular, using data from the worldwide petrochemical industry during the period 1975 to 1995, we study the impact of new plants’ time-to-build on firms’ decisions to invest under uncertainty. Our results suggest a nontrivial positive effect of resource accumulation lags on investment. Contradicting conventional wisdom, we show that competition may be fiercer in industries where firms accumulate resources more slowly and that uncertainty is not always a disincentive for investment. The robustness of these results is only mitigated for extremely long resource accumulation lags.

Keywords: Resource accumulation; commitment; flexibility; petrochemical; investment

JEL-codes: L00

47 pages, June 1, 2008

Full text files

papers.cfm?abstract_id=2229374 PDF-file 

Download statistics

Questions (including download problems) about the papers in this series should be directed to Antoine Haldemann ()
Report other problems with accessing this service to Sune Karlsson ().

This page generated on 2018-02-22 16:53:01.