2234: Hitting a Curveball: Strategic Factor Markets, Uncertainty, and Performance (19654)

Strategic factor markets allow firms to obtain competitive advantages through having superior information and more accurate expectations about the value of resources compared to rivals. Interestingly, this theoretical statement has not found consistent empirical support. Using a comprehensive proprietary dataset, we analyze strategic factor markets under different forms of uncertainty, specifically market and resource uncertainty. Our findings parallel previous empirical work in showing that superior information does not always lead to competitive advantage; however, this relationship is contingent on both types of uncertainty. Furthermore, we uncover that firm-specific strategic factor market capabilities exist. We demonstrate that uncertainty and firm-specific capabilities are necessary, but not sufficient, for obtaining competitive advantages through strategic factor market exchanges. Our findings help explain prior mixed empirical results while demonstrating the importance of uncertainty and firm-specific capabilities to strategic factor market decision-making.

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