Firm adaptiveness and performance heterogeneity: the case of sales–advertising dynamics in an evolving product market

We combine evolutionary theory concepts and multivariate persistence methodology to develop and test expectations about the adaptiveness of firm decisions and its implications for performance heterogeneity. We focus on the relatively reversible advertising decisions in an evolving product market, domains typically ignored by evolutionary research. We find that an adaptive decision routine helps an incumbent firm maintain its advantages and overcome the challenge posed by a major competitive entry.