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Regulatory reform and managerial choice: an analysis of the cost savings from airline deregulation

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  • Margaret Peteraf

    (Tuck School of Business at Dartmouth, Hanover, NH, USA)

  • Randal Reed

    (Morgan State University, Baltimore, MA, USA)

Abstract

This paper explores the question of how the differential exercise of managerial choice can facilitate organizational adaptation and improve efficiency over periods of regulatory change. We address this question in the context of the US airline industry, with a detailed decomposition of an airline cost function. Our findings suggest that managers employ choice in unconstrained domains to counteract the effects of constrained or pre-determined choices. This is an adaptive mechanism that helps firms adjust to environmental change or maneuver over a rugged landscape. We view this as a type of dynamic managerial capability for achieving dynamic fit under changing conditions. Copyright © 2008 John Wiley & Sons, Ltd.

Suggested Citation

  • Margaret Peteraf & Randal Reed, 2008. "Regulatory reform and managerial choice: an analysis of the cost savings from airline deregulation," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 29(2-3), pages 99-116.
    • Handle: RePEc:wly:mgtdec:v:29:y:2008:i:2-3:p:99-116
    DOI: 10.1002/mde.1397
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    References listed on IDEAS

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    1. Bitzan, John & Peoples, James, 2016. "A comparative analysis of cost change for low-cost, full-service, and other carriers in the US airline industry," Research in Transportation Economics, Elsevier, vol. 56(C), pages 25-41.

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