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Product Turnover: Simultaneous Product Market Entry and Exit

Resource Redeployment and Corporate Strategy

ISBN: 978-1-78635-508-9, eISBN: 978-1-78635-507-2

Publication date: 31 August 2016

Abstract

Resource redeployment may occur when a firm exits from one line of business and enters another. We suggest that when multiproduct firms identify opportunities in new high-growth markets, their entry will occur alongside exit from low-growth markets when the firm is resource-constrained. For our sample of over 47,000 high-tech US firms in CorpTech from 1993 to 2004, 5% of the firm-years include simultaneous entry and exit at the product market level, which we term “product turnover.” Firms are more likely to engage in product turnover when there is a larger spread between the highest and lowest growth rates for the product markets in the firm’s portfolio. This effect is strongest for small- and medium-sized firms, which tend to be privately held. Therefore, future research on resource redeployment might find fruitful ground in samples of mid-size firms.

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Acknowledgements

Acknowledgment

We gratefully acknowledge insights from conversations about corporate strategy with Deepak Somaya, adjustments to the CorpTech data provided by Phil Anderson, and feedback from participants at the 2015 special conference in Strasbourg, France, sponsored by USIAS.

Citation

Miller, D.J. and Yang, H.-s. (2016), "Product Turnover: Simultaneous Product Market Entry and Exit", Resource Redeployment and Corporate Strategy (Advances in Strategic Management, Vol. 35), Emerald Group Publishing Limited, Leeds, pp. 49-87. https://doi.org/10.1108/S0742-332220160000035004

Publisher

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Emerald Group Publishing Limited