Surviving through a boom and bust period

This paper examines how early strategies and organizational endowments affect firm performance in the context of a boom and bust period. An analysis of the performance drivers of 104 e-consulting firms from January 1998 through December 2001 shows that new firms that are successful in the long term follow growth and long-term organizational strategies distinctly different from those of new firms that succeed only when the industry is expanding but fail when it declines. Firms that succeeded during the expansion phase avoid hyper-growth and acquired small firms; during the decline phase, these firms retreated from international markets and became the industry consolidators. Finally, this category also draws on a more valued set of skills and wider service portfolios than do firms that succeed during industry expansion but fail during contraction.