Research Alert
Abstract
News — Prior research indicates that negative media coverage of business activities encourages a firm to engage in strategic change, but the conditions for this strategic focus have drawn less scholarly attention. Considering a firm's business model design (BMD) with distinct sources for value creation, we argue that the effect of negative media coverage on strategic change is contingent on the BMD. An analysis of longitudinal data from 96 established firms shows that novelty-centered BMDs reduce strategic change in response to negative media coverage. We contribute to research regarding strategic change in response to outside evaluations by explaining an important contingent factor related to strategy. We also expand on previous research indicating that managerial behaviors and attributes moderate the main effect of negative media coverage and provide a more nuanced understanding of this effect from a business model perspective. Our study explores how negative media coverage affects strategic changes in large firms, focusing on the role of the BMD. We found that firms with a novelty-centered BMD prioritizing innovation are less likely to alter their strategies in response to negative media coverage, suggesting that these firms are confident in their innovative approaches despite external criticism. Conversely, efficiency-centered BMDs, which focus on operational efficiency, did not show a meaningful moderating effect. For managers, this implies that firms with innovation-oriented business models may need less frequent strategic adjustments in the face of negative media. However, they should still communicate strategically to address potential long-term reputational risks.Research Summary
Managerial Summary