16.6 Corporate Agility

• Corporate agility defined as “a firm’s ability to adapt to environmental changes”

• (Lehn 2021) hypothesizes that firm agility increases firms’ survival rates.

• Since firms have to report accurately to the SEC, this measure is reliable.

• Agility measured as the sensitivity of its responsive strategies to rivals’ threats.

  • “A firm’s corporate agility is estimated as the sensitivity of its product similarity or dissimilarity (to its rival’s products) to the rivals’ product similarity (to the firm’s products.” (p. 9)

• Agility is different from firm flexibility

References

Lehn, Kenneth. 2021. “Corporate Governance and Corporate Agility.” Journal of Corporate Finance 66 (February): 101929. https://doi.org/10.1016/j.jcorpfin.2021.101929.