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My research looks at the fundamental interactions between strategy and technology, and at their consequences for the interplay of cooperation (division of labor) and competition (Schumpeterian dynamics). Within this broader scope, one stream of my research looks at emerging phenomena due to the adoption of novel technologies and uses them a starting point for developing new theories. This approach has been elaborated in my work on the division of labor, in which I examine how digital technologies contribute to the decentralization of economic activity in online markets and digital firms, thus speaking to a growing literature on the transition of modern economies to the digital age.


In a parallel line of inquiry, my research models the effect of competition on innovation by bringing the strategic perspective inherent in competitive dynamics to the conception of innovation as the outcome of complex problem solving via experimentation and search. In doing so, my work addresses a long-standing gap in theories of organizational adaptation by highlighting how firms seeking to adapt need to consider not only their internal technological performance, but also the strategic posture of their competitors.


Methodologically, my work makes use of formal models and empirical techniques, often in combination, with the theoretical analysis of cause and consequence providing the standard against which to appraise the patterns in the data. My empirical research consists of large-sample longitudinal analyses using instrumental variable approaches as well as robustness checks making full use of the granularity of the datasets I constructed over the years. My conceptual research draws extensively from practitioner-oriented publications to develop theories about concrete problems of relevance to managerial practice. The managerial relevance of my research has allowed me to translate several of the ideas and insights of my papers into classes taught at the bachelor, master, and MBA level.


In what follows, I describe each of my research streams in more detail, summarizing the various studies in each stream.


Inspired by the classical work of Adam Smith and George Stigler, this research stream studies the impact of resource attributes and demand characteristics on the division of labor. At the time of their writing, Adam Smith drew insights from butchers, bakers and brewers in the Highlands of Scotland in 1776, and George Stigler from the Lancashire textile industry in 1951; nowadays the productive system in developed economies is mainly devoted to the tertiary and quaternary sectors. Moving with the times, my work in this area applies and extends the classic theories to service and high-tech industries, demonstrating the relevance of such important theoretical lenses to the study of digital intermediaries and ecosystems.


My work on the division of labor departs from recent iterations of the literature on this subject by questioning the role played by coordination costs—such as search costs associated with matching individuals to tasks—as a limiting factor to cooperation. With digitalization and online labor markets matching jobs to contractors on the fly, the coordination costs emphasized by extant studies are arguably becoming less relevant. This trend is exemplified by the empirical setting of Giustiziero 2021, [1] ("Is the division of labor limited by the extent of the market?" published in Strategic Management Journal), namely, the US real estate brokerage industry. In real estate, agents advertise properties for sale using an online platform which significantly reduces search costs and information asymmetries that could hinder cooperation. Absent coordination costs, the division of labor is affected by a different, understudied cost, the opportunity cost of dividing value, which emerges when middlemen take a cut of transaction revenues. The theory and findings of the paper show that the cost of dividing value can increase agents’ incentives to cut out the middleman for high-value and low-value transactions, especially when the disparity between valuable transactions and the rest is large and when the availability of valuable transactions is limited. These findings shed light on the mechanisms aggregating individual endeavors into broader economic objectives, whether mediated by markets, online platforms, or organizations.

In Giustiziero, Kretschmer, Somaya, and Wu, 2021 [2] ("Hyperspecialization and Hyperscaling," forthcoming in Strategic Management Journal), the question of the division of labor is investigated at the firm level. Here, the literature has often looked at is topic through the lenses of transaction cost logics. Drawing on this conventional view, scholars have argued that digital technologies would reduce transaction costs and thus lead to greater specialization and vertical “dis-integration” among smaller firms. Therefore, transaction costs logics would typically predict that firms would have reduced vertical scope and reduced scale. These predictions, however, are at odds with rise of platform ecosystems in the digital economy, whose workings are inherently based on the premise of non-integration and have the capacity to grow very large in scale. This article addresses this inconsistency by positing that highly scalable resource bundles—bundles that create more value when firms operate at large scales—entail significant opportunity costs of integration. Using descriptive theory and a formal model, the paper develops several propositions that align with observed features of digital businesses, which can explain “hyperspecialization” and “hyperscaling” in digital firms.

Having examined the division of labor in the absence of coordination and transaction costs, Giustiziero 2021 [3] ("Vertical and horizontal expansion in value based models," working paper) brings them back into the equation. The paper analyzes how transaction costs interact with firms’ resources and capabilities as drivers of vertical integration and horizontal diversification, unpacking a set of instances in which the two strategies might be complements. Firms might find it optimal to expand along both dimensions when diversification creates value by sharing resources across multiple businesses, but increases firms’ dependence on a specific set of suppliers, thus exacerbating the hold-up problem over the appropriation of rents. An earlier version of this paper won the Distinguished Student Paper Award from the Business Policy and Strategy Division of the Academy of Management.



The key theme running through my work on competition is that of “creative destruction,” which Schumpeter described as a "process of industrial mutation that continuously revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one." Although this theme has been extensively examined in economics, an important limitation of economic studies is their narrow focus on incentives, which abstracts away from any representation of the internal search process through which organizations seek and identify novel technological solutions. Therefore, these studies provide a poor characterization of the type of complex problem solving at the heart of the innovation process. By contrast, complex problem solving is a key premise of the theories of search advanced by the students of organizational adaptation. While these theories offer a powerful analogy for organizational search in complex environments, they largely avoid dealing with competition, thus falling short of capturing the essence of the Schumpeterian “process of industrial mutation,” which is intrinsically competitive.

My work in this area tries to reconcile these two perspectives by combining the strategic element of economics models with a more realistic conception of the innovation process. This subject is examined in Giustiziero, Kaul, and Wu, 2019 [4] ("The dynamics of learning and competition in Schumpeterian environments," published in Organization Science), in which we combine insights from the literatures on competitive interactions and evolutionary economics to develop a theoretical framework of Schumpeterian competition between entrants and incumbents. We argue that competitive interactions can delineate four distinct scenarios of Schumpeterian competition, including the traditional creative construction and creative destruction cases, as well as the case where aggressive action by incumbents preempts further threats from entrants, which we term creative deterrence. More novel than these, our framework also identifies the unexplored case of creative divergence wherein incumbents try to learn from entrants, but cause them to retreat into distant technological niches to avoid knowledge spillovers. Exploratory analyses of the cardiovascular medical device industry find patterns consistent with the creative divergence scenario, with incumbent knowledge investments helping them to learn from entrants, but these learning benefits being undermined as entrants move away from incumbents, thus highlighting the possibility that investments in absorptive capacity may alter the supply of external knowledge.

These arguments are further developed in Giustiziero, Kaul, and Martignoni, 2021 [5] ("Strategic Search," under review at Management Science). Here, we explore the effect of competition on adaptation in complex environments via a formal model that combines the standard NK methodology with a game-theoretic approach to monopolistic competition. In the model, competitive dynamics guide search on the NK landscape in two dimensions: a vertical dimension firms seek to ascend to discover superior technologies, and a horizontal one, along which firms try to distance themselves to differentiate and reduce competitive intensity. This simple model generates a rich set of results, shedding light on how competitive dynamics shape the impulse towards the discovery of new methods of production and forms of economic organization.

The link between competition and search is also central to Giustiziero and Martignoni, 2021 [6] ("When losing a valuable resource enhances performance," working paper). In this paper, we conjecture that resource mobility, such as the departure of key personnel to competing firms, can be beneficial to organizations. Our theory builds on the resource-based view and organizational adaptation literatures to derive a formal model in which competing firms exchange resources while searching on a rugged landscape. We demonstrate that both industry leaders and followers can benefit from exchanging resources, creating win-win situations with strong incentives to encourage resource mobility across firms. These results provide a novel explanation for strategic openness, which is often observed in practice, but seemingly inconsistent with the premises of the resource-based view. In our model, openness can be a driving mechanism for competitive advantage because it allows firms to search the knowledge landscape more broadly, explore new resource combinations, and update their knowledge base. When operating in complex environments, firms may therefore openly embrace resource exchanges with other firms and adopt a more cooperative stance, as in the case of employee mobility in Silicon Valley.

In Giustiziero, 2021 [7] ("The Coase conjecture and the innovation- competition paradox," working paper), I re-examine the basic motivations of firms to introduce novel technologies and how these relate to the strength of intellectual property protection. Albeit several studies have looked into this issue, none (to my knowledge) accounts for the fact that innovative products, such as smartphones and computers, tend to be durable goods. To fill this gap, I design a game-theoretic model that borrows elements from the Coase conjecture, which argues that firms in durable-goods markets are in price competition with their future selves and yet-to-exist rivals. I demonstrate that when market entry is costly and competition restricted, the durability of goods allows incumbents to discourage rival innovation. When entry is costless, however, the threat of future competition induces incumbents to invest more upfront to avoid direct competition later. The model implies that firms always innovate more in durable-goods markets if entry is unrestricted, while this is not necessarily the case in non-durable-goods markets. One implication of this study is that patents, which restrict entry, may stifle, rather than foster innovation.


I also initiated an unpaid research collaboration with an Italian InsurTech company collecting vehicle telematics from in-car devices. Using funds the company received from the European Union (Horizon 2020), I helped the company hire a computer science postdoc, who is assisting me in this collaboration. Together with Ronald Klingebiel (Frankfurt School), Florian Ellsaesser (Frankfurt School, Machine Learning), and Jan Nagler (Frankfurt School, Theoretical Physics), we are working on the manuscript “Adverse selection and moral hazard with perfect information.” In this project, we study the impact of information technologies on the selection and moral hazard dynamics in the automotive insurance market. Information technologies are designed to mitigate information asymmetry using the internet, smart phones, and big data processing to provide real-time monitoring and enhanced transparency. In the auto insurance industry, a classic example of the potential distortion caused by information asymmetry, information technologies promise to correct the incentives to purchase insurance by the individuals at a higher risk to suffer a loss (adverse selection) and the tendency of insurance to dull the motivation to take precautions (moral hazard). Our preliminary analyses, however, do not find support for this proposition. On the contrary, they demonstrate that drivers are overconfident, believe their risk is low when, in fact, it is high, and overestimate the extent to which their actions affect the likelihood of meeting the performance targets that would reduce their premiums. As a result, adverse selection and moral hazard persist in this setting even though drivers and insurance companies have complete information about skills and risk profiles. Moving forward, we are planning to address endogeneity concerns by randomly assigning discounts (inducements) to potential adopters, de facto creating an instrumental variable. Then, we plan on comparing the characteristics and driving behaviors of a self-selected sample with those of the induced sample, which is more likely to be representative of the broader population. If the initial adoption is driven by behavioral biases, then the agents of the self-selected sample should be more likely to have a lower driving score at the time of enrollment and correct their driving behavior at a later stage during the assessment period, often failing to meet the targets set by the insurance firm in order to award discounts.

In the longer term, I would like to initiate more collaborations with scientists from other disciplines and add more field experiments to the pipeline, continuing with the ethos of the aforementioned project “Adverse selection and moral hazard with perfect information.”

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