Rory M. McDonald

Assistant Professor of Business Administration

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.

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