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Environmental Jolts, Clocks, and Strategic Change in the U.S. Airline Industry: The Effects of Deregulation and the 9/11/2001 Terrorist Attacks


  • Goll Irene

    (University of Scranton)

  • Rasheed Abdul A.

    (University of Texas at Arlington)


This study examines the effects of two major environmental jolts, the Airline Deregulation Act of 1978 and the 9/11/2001 terrorist attacks, on strategic change and performance in the U.S. air carrier industry. The sample includes the Major U.S. air carriers during two periods of time: deregulation (1974-1986) and 9/11/2001 (1997-2008). Data were collected from archival sources and analyzed using cross-sectional time series regressions with fixed effects. The results show that following both environmental jolts, the initial response of the airlines was emphasis on cost control. However, over the long run, there was a deceleration of the emphasis on cost control. Further, following deregulation, the long run response involved the acceleration of differentiation change. We also found a significant relationship between strategic change and firm performance. The results contribute towards a reconciliation of the conflicting predictions of the repetitive momentum hypothesis and the deceleration hypothesis.

Suggested Citation

  • Goll Irene & Rasheed Abdul A., 2011. "Environmental Jolts, Clocks, and Strategic Change in the U.S. Airline Industry: The Effects of Deregulation and the 9/11/2001 Terrorist Attacks," Business and Politics, De Gruyter, vol. 13(4), pages 1-37, December.
  • Handle: RePEc:bpj:buspol:v:13:y:2011:i:4:n:1

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    References listed on IDEAS

    1. Heather A. Haveman & Michael V. Russo & Alan D. Meyer, 2001. "Organizational Environments in Flux: The Impact of Regulatory Punctuations on Organizational Domains, CEO Succession, and Performance," Organization Science, INFORMS, vol. 12(3), pages 253-273, June.
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    3. Nath, Deepika & Newell, Stephanie E., 1998. "Organizational responses to a hypercompetitive environment: A case study of Pepsi Canada," Journal of Business Research, Elsevier, vol. 41(1), pages 41-48, January.
    4. Brown Johnson, Nancy & Anderson, Jonathan R, 2004. "5. Airline Employment, Productivity, And Working Conditions Following Deregulation," Research in Transportation Economics, Elsevier, vol. 10(1), pages 79-108, January.
    5. Clifford Winston, 1998. "U.S. Industry Adjustment to Economic Deregulation," Journal of Economic Perspectives, American Economic Association, vol. 12(3), pages 89-110, Summer.
    6. Pelham, Alfred M., 1999. "Influence of Environment, Strategy, and Market Orientation on Performance in Small Manufacturing Firms," Journal of Business Research, Elsevier, vol. 45(1), pages 33-46, May.
    7. Zuniga-Vicente, Jose Angel & de la Fuente-Sabate, Juan Manuel & Suarez Gonzalez, Isabel, 2004. "Dynamics of the strategic group membership-performance linkage in rapidly changing environments," Journal of Business Research, Elsevier, vol. 57(12), pages 1378-1390, December.
    8. Strandholm, Karen & Kumar, Kamalesh & Subramanian, Ram, 2004. "Examining the interrelationships among perceived environmental change, strategic response, managerial characteristics, and organizational performance," Journal of Business Research, Elsevier, vol. 57(1), pages 58-68, January.
    9. Sine, Wesley D. & David, Robert J., 2003. "Environmental jolts, institutional change, and the creation of entrepreneurial opportunity in the US electric power industry," Research Policy, Elsevier, vol. 32(2), pages 185-207, February.
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    Cited by:

    1. Liliana PĂ©rez-Nordtvedt & Susanna Khavul & David A. Harrison & Jeffrey E. McGee, 2014. "Adaptation to Temporal Shocks: Influences of Strategic Interpretation and Spatial Distance," Journal of Management Studies, Wiley Blackwell, vol. 51(6), pages 869-897, September.

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