Strategic Management Review > Vol 2 > Issue 2

Declining Markets, Resource Specificity, and Redeployment Decisions

Timo Sohl, Univ. Pompeu Fabra (UPF), Department of Economics and Business, UPF Barcelona School of Management and Barcelona GSE, Spain, , Timothy B. Folta, University of Connecticut, School of Business, USA,
Suggested Citation
Timo Sohl and Timothy B. Folta (2021), "Declining Markets, Resource Specificity, and Redeployment Decisions", Strategic Management Review: Vol. 2: No. 2, pp 391-412.

Publication Date: 14 Sep 2021
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Declining marketsresource redeploymentresource specificitybusiness relatednesstransaction costscorporate renewal


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In this article:
Literature Review 
Resource Specificity and Redeployment Decisions 


This paper emphasizes that the key determinants of redeployment decisions — adjustment costs and transaction costs — are illuminated by consideration of the sources of resource specificity. Building on prior work separating the degree of a resource's firm specificity and usage specificity, we develop a set of novel propositions on the conditions under which headquarters are more likely to withdraw a resource from a declining market and transfer it to a more attractive one. First, we clarify how usage specificity and business relatedness may interact in determining adjustment costs. Second, we examine how firm specificity and market transaction costs may interact in determining the use of resource redeployment. Third, we integrate the dimensions of usage- and firm-specificity into our framework explaining redeployment decisions. Overall, this paper contributes to an improved understanding of the self-selection processes of redeployment decisions and provides managers with a framework to evaluate particular resources as potential candidates for internal redeployment in the course of corporate renewal.



Strategic Management Review, Volume 2, Issue 2 Special issue on Corporate Renewal
See the other articles that are part of this special issue.