JUMPING SHIP - THE DIFFUSION OF STRATEGY ABANDONMENT

This paper focuses on organizations' abandonment of strategy, which ma y be driven jointly by contagion and competition from other organizati ons. This paper treats both explanations but emphasizes contagion. I a rgue that strategy abandonment is contagious because the future perfor mance of current and alternative strategies is highly uncertain, causi ng decision makers to examine the actions of other organizations in th e industry for clues to the correct action. Contagion from organizatio ns easily observed by the focal organization is stronger than contagio n from other organizations, causing corporate links across markets to become important routes for the contagion of strategy abandonment. Thi s theory is tested on a sample of radio stations abandoning a strategy and is supported by evidence that contagion of abandonment occurs thr ough the influence of an organization's social reference groups.