Dr. Todd Zenger will be presenting:
“Competing with theories: How entrants secure incumbent’s resources and capture awareness rents”
Abstract: An assumption of factor market efficiency is often used to grant primacy to firms’ existing unique and valuable resources as the source of economic rents. But this assumption is difficult to reconcile with many current market outcomes. For instance, four of the six companies with the highest global market capitalization in 2022 were upstarts in their industries with few resources at their origins. More surprising, three of these entrants were assisted by incumbents with vastly superior resources in assembling the resources required. In this paper we explore how entrants compete with theories to secure resources from incumbents and capture rents. In our setup, theories with causal logic generate awareness of valuable potential future states and shape the payoffs and probabilities associated with these states. We combine work in the theory-based view and value capture theory to distinguish among three distinct sources of economic rents that are potentially available to entrants with superior awareness: awareness rents, confidence rents, and resource rents. We explore the circumstances under which these three types of rents are available. By exploring the role of theories and awareness in value creation and capture, our paper seeks to deepen our understanding of how entrants both attract resources and secure rents.
Bio: Todd Zenger is the N. Eldon Tanner Chair in Strategy and Strategic Leadership at the David Eccles School of Business at the University of Utah. He also holds the University of Utah designation as a Presidential Professor. From 1990 through July of 2014, he served as a faculty member at Washington University in St. Louis in the Olin Business School. He currently serves as Editor in Chief of Strategy Science, one of the leading academic publications in strategy. He also serves as Academic Director of the Goff Strategic Leadership Center. He has previously served as senior associate dean, as department (or area) chair for more than sixteen years, and as academic director of the Executive MBA and Master of Business Creation programs. He has received numerous awards for his executive MBA and professional MBA teaching. He was inducted as a Fellow of the Strategic Management Society in 2022 and as a Fellow of the Academy of Management in 2023.
REGISTRATION CLOSED