The Dynamics of Learning and Competition in Schumpeterian Environments 

with A. Kaul and B. Wu

Organization Science (2019)


In this study, we examine the nature of Schumpeterian competition between entrants and incumbents. We argue that incumbents may respond to the threat of entry by either attacking the entrant or trying to learn from it, and that entrants, in turn, may react by either reciprocating the incumbent’s advances or retreating from it. Putting these competitive choices together, we develop a framework of four distinct potential scenarios of Schumpeterian competition. In particular, we emphasize a scenario we term creative divergence, wherein incumbents try to learn from entrants and build on their technologies, but their investments to do so cause entrants to retreat, resulting in diminishing returns to learning investments by incumbents. Exploratory analyses of the US 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.

Is the Division of Labor limited by the Extent of the Market? Evidence from Residential Real Estate

(first-round R&R at Strategic Management Journal)

The division of labor allows individuals to focus their time on a narrower band of activities and increase productivity through specialization, but it also comes at a cost. When individuals divide labor, they divide value and split the “pie” they help create. In this paper, I formally model this trade-off and examine how it is affected by market characteristics. I test the empirical predictions of the theory in the residential real estate brokerage industry in Southeast Michigan. Consistent with the model, I find that the division of labor is more likely for properties in the middle of the price distribution and in larger markets, but less likely at the tails and in markets where property prices exhibit substantial heterogeneity.


A resource-based theory of hyperspecialization and hyperscaling 

with B. Wu and D. Somaya

(Under Preparation for Submission)


This paper aims at explaining the emergence of digital intermediaries like Google, Amazon, and Airbnb. The paper starts from the observation that, compared to the large-scale enterprises of the past, digital intermediaries tend to be narrower in their vertical scope (hyperspecialization) but larger in terms of revenues and market capitalization (hyperscaling). The paper develops a formal model demonstrating that hyperspecialization and hyperscaling are consistent with the optimal allocation of resources in environments that, like those of digital technologies, are characterized by increasing returns to scale. At the heart of the theory is the intuition that increasing returns can lead to specialization by augmenting the opportunity cost of not employing resources as intensively as possible - even when resources are fungible and general purpose. The combination of economies of specialization and increasing returns boosts the overall productivity of resources, driving higher profits and attracting more capital for large-scale investments. 

Vertical and Horizontal Expansion in Value-based Models

(Under Preparation for Submission)


Strategy research has often treated vertical integration and diversification strategies as independent topics. Using a biform model, this paper reconciles the existing chasm by examining the simultaneous interplay between vertical and horizontal corporate strategies. I find that firms in a classical Williamsonian scenario characterized by “small numbers”, ex ante vertical integration decisions, and ex post bargaining do not necessarily prefer vertical integration to market transactions. Conversely, if one firm in the economy can develop a valuable, rare, inimitable, and non-substitutable resource that favors synergies from horizontal expansion strategies, said firm does strictly prefer vertical integration. Overall, I show that vertical and horizontal corporate strategies may be complements even when governance and production costs increase disproportionately to firm size.