The Paradox of Success: Fact or Fiction?
| Authors | |
|---|---|
| Year of publication | 2021 |
| Type | Article in Proceedings |
| Conference | Proceedings of the 16th European Conference on Innovation and Entrepreneurship |
| MU Faculty or unit | |
| Citation | |
| Keywords | replication; Paradox of success; strategic decision making; airline industry; deregulation |
| Description | The relationship between past performance, strategic change, and subsequent performance presents an important behavioral mechanism. Research in the past has identified that past success encourages strategic persistence supporting future success. However, this sequence breaks when environmental conditions change. This is described by a so-called Paradox of success. The paradox represents a situation in which the history of past successes induces strategic persistence that is – under a major environmental change, such as the deregulation – detrimental to subsequent firm performance as the firm fails to adapt its strategy. In our research, we looked at Audia et al.’s (2000) who empirically studied the Paradox of success. One of their studies focused on the U.S. airlines’ behavior during the industry’s deregulation in the ’70s and the early ‘80s. In our research, we attempted to replicate the original study as closely as the availability of data and the description of the methodology allowed us. In this attempt, we experienced some difficulties and were unable to gather a full data sample nor clearly identify some steps taken by the authors. Besides the actual replication, we also conducted several additional analyses that provide further insights and partially contradict the original findings. We created boxplots for the data and conducted Welch Two Sample T-tests to analyze if the findings could be attributed to regression to the mean. However, the results still provide some indication of the mechanisms hypothesized by Audia et al. (2000). Therefore, from our perspective, the actual existence of the Paradox of success remains an open question. |