Fast forward? Time compression attempts and post-IPO performance

An initial public offering (IPO) expands a firm's access to funding and enables future-oriented strategic investments. Though aggressive investments can open new opportunities and speed the construction of relative advantage, this aggression risks time compression diseconomies and maladaptive learning from rushed experiences. We propose a firm's investment tempo and industry velocity combine to affect the trajectory of a firm's post-IPO performance. Agent-based simulation modeling suggested that aggressive, up-tempo investment sped the construction of relative advantage in low-velocity industries. Empirical analyses of multiyear post-IPO windows in real firms supported this. In contrast, simulations and analyses of real firms suggested up-tempo investment was maladaptive in high-velocity industries as the combination of fast investment and fast industry change was often more than boundedly rational agents could cognitively handle.