Flammer, C and Ioannou, I (2021) Strategic Management during the Financial Crisis: How Firms Adjust their Strategic Investments in Response to Credit Market Disruptions. Strategic Management Journal, 42 (7). pp. 1275-1298. ISSN 0143-2095
Abstract
This study investigates how companies adjusted their investments in key strategic resources—i.e., their workforce, capital expenditures, R&D, and CSR—in response to the sharp increase in the cost of credit (the “credit crunch”) during the financial crisis of 2007-2009. We compare companies whose long-term debt matured shortly before versus after the credit crunch to obtain (quasi-)random variation in the extent to which companies were hit by the higher borrowing costs. We find that companies that were adversely affected followed a “two-pronged” approach of curtailing their workforce and capital expenditures, while maintaining their investments in R&D and CSR. We further document that firms that followed this two-pronged approach performed better post-crisis.
More Details
Item Type: | Article |
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Subject Areas: | Strategy and Entrepreneurship |
Additional Information: |
© 2020 Wiley. This is the peer reviewed version of the following article: Flammer, C. and Ioannou, I. (2020), 'Strategic Management During The Financial Crisis: How Firms Adjust Their Strategic Investments In Response To Credit Market Disruptions'. Strategic Management Journal which has been published in final form at https://doi.org/10.1002/smj.3265. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions |
Date Deposited: | 06 Jan 2021 18:10 |
Date of first compliant deposit: | 04 Jan 2021 |
Subjects: |
Crises Strategic planning Investment appraisal |
Last Modified: | 05 Nov 2024 03:03 |
URI: | https://lbsresearch.london.edu/id/eprint/1619 |