Articles

The Right Speed and Its Value

G. PACHECO DE ALMEIDA, A. HAWK, B. YEUNG

Strategic Management Journal

February 2015, vol. 36, n°2, pp.159-176

Departments: Strategy & Business Policy, GREGHEC (CNRS)

Keywords: Time-based competition, Speed capabilities, Strategy dynamics, Random parameters model, Firm-specific coefficients


Slow investments cause substantial revenue losses, yet acceleration increases costs. This tradeoff implies that an optimal investment speed usually exists; it is faster the higher a firm’s intrinsic speed capability. We hypothesize that it is a firm’s intrinsic speed capability, rather than its speed relative to industry competitors per se, that boosts firm value. Using data on oil and gas facilities (1996-2005), we find that intrinsic speed capabilities augment firm value in a varied way: their value is larger with better corporate governance, lower cost of capital, and higher ability to draw value from R&D investment. Our work elevates the discussion of speed from a project level consideration to a firm level competitive advantage issue and raises the need to further explore its strategic value


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