Rory M. McDonald

Assistant Professor of Business Administration

Unit: Technology and Operations Management

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(617) 496-6938

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Rory McDonald is an Assistant Professor of Business Administration in the Technology and Operations Management Unit. He teaches the Technology and Operations Management course in the MBA required curriculum.

Professor McDonald’s research focuses on how firms innovate effectively in new technology-enabled markets. Drawing on in-depth fieldwork and archival data, he studies how executives develop viable strategies in these contexts and how they obtain resources that improve their chances of success. For his research on Internet companies, Rory received a Kauffman Foundation Fellowship in Entrepreneurship and was a finalist for best dissertation in Business Policy and Strategy by the Academy of Management.

Professor McDonald received his PhD in Management Science and Engineering from the Stanford Technology Ventures Program. He also holds an MBA and an MA in economic sociology from Stanford as well as two engineering degrees from the University of South Florida. Before joining Harvard, he was on the faculty of the University of Texas at Austin where he received the CBA Foundation Teaching award. Rory is on the board of YCG Funds, an Austin-based mutual fund company, and is an advisor to several startups.

Rory and his wife Anne live in Sudbury, MA with their four children. They are active in their church and enjoy a variety of family activities.

Publications

Journal Articles

  1. Exposed: Venture Capital, Competitor Ties, and Entrepreneurial Innovation

    This paper investigates the impact of early relationships on innovation at entrepreneurial firms. Prior research has largely focused on the benefits of network ties, documenting the many advantages that accrue to firms embedded in a rich network of inter-organizational relationships. In contrast, we build on research emphasizing potential drawbacks to examine how competitive exposure, enabled by powerful intermediaries, can inhibit innovation. We develop the concept of competitive information leakage, which occurs when firms are indirectly tied to their competitors via shared intermediary organizations. To test our theory, we examine every relationship between entrepreneurial firms and their venture capital investors in the minimally-invasive surgical segment of the medical device industry over a 22-year period. We find that indirect ties to competitors impede innovation, and that this effect is moderated by several factors related to the intermediary's opportunities and motivation to leak important information.

    Keywords: Competition; Intellectual Property; Innovation and Invention; Medical Devices and Supplies Industry;

    Citation:

    Pahnke, Emily Cox, Rory McDonald, Dan Wang, and Benjamin Hallen. "Exposed: Venture Capital, Competitor Ties, and Entrepreneurial Innovation." Academy of Management Journal (forthcoming). View Details
  2. Life in the Fast Lane: Origins of Competitive Interaction in New vs. Established Markets

    Prior work examines competitive moves in relatively stable markets. In contrast, we focus on less stable markets where competitive advantages are temporary and R&D moves are essential. Using evolutionary search theory and an experiential simulation with in-depth fieldwork, we find that the relationship between performance and subsequent competitive moves depends on the type of market, not just on whether performance is high or low. High performers seek to maintain status quo, but this requires different strategies in different markets. They are conservative in established markets and bold in new ones. In contrast, low performers seek to disrupt the status quo. Again, this requires different strategies in different markets. Unlike high performers, low performers are bold in established markets and conservative in new ones where they lack understanding of how to disrupt rivals. Overall, our results incorporate unstable markets in theories of competitive dynamics and competitive interaction in theories of evolutionary search. By examining R&D moves, we also extend competitive dynamics research to include technology-based firms for whom temporary advantages are often essential.

    Keywords: Balance and Stability; Competitive Advantage; Supply and Industry;

    Citation:

    McDonald, Rory, Eric L. Chen, Riitta Katila, and Kathleen M. Eisenhardt. "Life in the Fast Lane: Origins of Competitive Interaction in New vs. Established Markets." Special Issue on The Age of Temporary Advantage. Strategic Management Journal 31, no. 13 (December 2010): 1527–1547. View Details

Working Papers

  1. Competing in New Markets and the Search for a Viable Business Model

    Prior research examines how firms compete effectively in established markets. This study investigates new markets, and traces how entrepreneurial rivals in such a market search for a successful strategy. Through an in-depth, multiple-case study of firms in the nascent online-investing market, we induce a theoretical framework to explain how firms win the race to find a viable business model. As the new market emerged, high-performing firms enacted three strategies in sequence that helped them achieve their objective quickly and efficiently. First, their executives focused primarily on substitutes but copied from rivals. Next, they actively tested their assumptions and made major resource commitments to the business model they identified as the most lucrative. Finally, they deliberately maintained a loosely structured organizational activity system in order to continue to accommodate emergent sources of value. For these firms, competition resembled neither economic rivalry nor collective action but a logic of interaction akin to parallel play. The resultant middle-range theory has implications for research on entrepreneurial competition in new markets and on the organizational processes of developing a business model.

    Keywords: Business Model; Market Entry and Exit; Competitive Strategy; Entrepreneurship; Financial Services Industry;

    Citation:

    McDonald, Rory. "Competing in New Markets and the Search for a Viable Business Model." Harvard Business School Working Paper, No. 14-088, March 2014. View Details

Cases and Teaching Materials

    Research Summary

  1. Overview

    Professor McDonald studies how firms successfully navigate new markets. He examines how widely accepted strategic prescriptions can actually undermine managers’ attempts to develop a viable business model or stake out a defining new market position, and considers the important role played by entrepreneurial resource providers in these processes. Empirically, he relies on a complementary range of methodologies – in some instances solving problems deductively through quantitative analysis of archival data, complemented by fieldwork while in other instances adopting an inductive approach that draws on structured interviews and field research to generate new insights.
  2. Competing in New Markets

    Strategic advisors counsel managers to conduct a thorough competitive analysis emphasizing key points of differentiation. But for new markets, Professor McDonald’s research suggests that reports of the threat posed by similar rivals may be greatly exaggerated, and managers may be well-advised to focus on substitutes, using rivals as mere stepping stones to speed their own progression and keep costs low. Similarly, while popular media accounts laud market ‘evangelists’ who open up new market space through symbolic acts of persuasion, McDonalds’s research argues that successful innovation in new markets resembles problem-solving more than missionary work, and suggests that managers may be better off riding the coattails of these hardworking evangelists to establish a defining position in the new market.

  3. Entrepreneurial Resources

    Mounting evidence suggests that ventures’ early relationships are critical for their success by helping overcome initial resource constraints, improve internal operations, and gain access to diverse audiences such as potential investors, the media, and customers. But which providers should managers engage? In collaboration with researchers at London Business School, Columbia, and the University of Washington, Professor McDonald examines the value created (and sometimes destroyed) by venture capitalists, super angels, and other resource providers.

    Teaching

  1. Overview

    Technology and Operations – MBA Required Curriculum This course enables students to develop the skills and concepts needed to ensure the ongoing contribution of a firm's operations to its competitive position. It helps them to understand the complex processes underlying the development and manufacture of products as well as the creation and delivery of services. http://www.hbs.edu/faculty/units/tom/Pages/curriculum.aspx
  1. Wiley Blackwell Outstanding Dissertation Award : Finalist for the 2013 Wiley Blackwell Outstanding Dissertation Award from the Academy of Management, Business Policy and Strategy Division for his dissertation entitled, “Competition and Strategic Interaction in New Markets.”

  2. Trammell/CBA Foundation Teaching Award for Assistant Professors: Winner of the 2013 Trammell/CBA Foundation Teaching Award for Assistant Professors at the University of Texas at Austin, McCombs School of Business.

  3. Gerald J. Lieberman Fellowship: Received a 2010-2011 Gerald J. Lieberman Fellowship from Stanford University.

  4. National Defense Science & Engineering Graduate Fellowship : Received a 2008-2010 National Defense Science & Engineering Graduate Fellowship.

  5. Kauffman Foundation Dissertation Fellowship: Received a 2009-2010 Kauffman Foundation Dissertation Fellowship.