Location, Location, Location

Our results suggest that spatial distance is important when it comes to TA intentions, but in complex ways. Distance from the locus of change moderated the effect that

891 interpretation had on TA intentions. Among business owners who saw the shock as an

Adaptation to Temporal Shocks

opportunity, those who were physically closer to it were more likely than those who were far away from it to exploit it – by deciding to pursue TA. The economics argument, which suggests that closeness to the locus of change enhances the amount and quality of information available (Krugman, 1991; Rosenthal and Strange, 2001), the interaction between the firm and the disruptor (Fellmann et al., 1997), and the flow of customers to the area (Horton and Reynolds, 1971), explains why closeness strengthens the effect of perceived opportunity on TA intentions for firms. In spite of the lower level of construal attributed to a spatially close disruption (Trope and Liberman, 2003), the fact that the disruption is positively evaluated seems to enable business owners to broaden their thinking (Fredrickson, 2001) and evaluate options more rationally.

In support of construal theory, which predicts that nearby objects negatively interpreted create tunnel vision (Trope and Liberman, 2010), we found that the threat- rigidity argument applies to firms that are spatially close to the locus of change (Staw et al., 1981). Firms near the Stadium appeared to have adopted the ‘deer in the head- lights’ posture in response to the Stadium’s threat (Dewald and Bowen, 2010). These firms were more likely to ‘hunker down’ or take a wait-and-see approach. Thus, ‘bad’ seemed to get stronger when it is closer. However, also in support of construal theory, which predicts that distant objects negatively interpreted allow for individuals to engage in more rational and strategic decisions, when far away firms are threatened by the locus of change, they appear to act as the behavioural theory of the firm predicts. Distant firms that interpret the disruption as a threat are likely to engage in TA (Cyert and March, 1963). Thus, spatial distance neutralizes the potentially paralysing effect of a perceived threat. Previous research has shown that the threat-rigidity hypothesis depends on contingency factors (e.g. the level of severity or controllability associated with the threat (Chattopadhyay et al., 2001; Shimizu, 2007) and family influence (Sirmon et al., 2008)). We contribute directly to this conversation by showing that the operation of the threat- rigidity thesis and the behavioural theory of the firm depend on distance from the environmental disruption. This finding suggests that strategic decision making scholars would benefit by including construal level theory (Trope and Liberman, 2010) as a powerful tool for explaining strategic choices, and incorporating other forms of temporal and social (in this context, firm similarity) distance into predictions about strategic thought and action.

Our data also suggest that spatial distance indirectly affects TA intentions through perceived opportunity. Consistent with research on geography (Plummer, 2010; Tobler, 1970), economies of agglomeration (Krugman, 1991; Rosenthal and Strange, 2001), and the psychology of distance (Sadalla et al., 1980; Tversky, 2000), our results indicate that business owners pay closer attention to signals that are easier to pick up and harder to avoid (Ozcan and Overby, 2008), and that they formulate time-directed actions to respond to those signals. Perhaps just as importantly, spatial distance did not over- determine the interpretation of the disruption, despite its potential salience. Zero-order correlations did not exceed r = −0.19. Supplemental analyses showed no quadratic or cubic effects of distance, leaving a great deal of ‘room’ for variables other than spatial distance to play a role in interpretation and TA formulation. Both opportunities and threats are crafted in the minds of business owners as a temporal change is near, large,

L. Pérez-Nordtvedt et al.

and distinct (e.g. Holyok and Mah, 1982; Lee and Tversky, 2005). When the perception is one of an opportunity, it then triggers the decision by the business owner to seek TA as a response.

Location, Location, Location