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Firm Survival and the Evolution of Oligopoly
Abstract
After their commercial introduction, the number of producers of autos, tires, televisions, and penicillin initially grew and then experienced a sharp decline or shakeout. Guided by an evolutionary model of entry and exit, firm survival patterns in the four products are examined to determine whether there were common forces governing their distinctive evolution. Predictions concerning the effects of pre- and post-entry experience and the timing of entry on firm survival are tested. The findings are used to reflect on why industries experience shakeouts and evolve to be oligopolies.
... Existing theoretical models of industry evolution (Carroll and Hannan, 1989;Hannan and Freeman, 1989;Klepper, 1997Klepper, , 2002 are ill-equipped to fully capture the particularities that characterize the university spinoff industry. Spinoffs operate within a larger spinoff population that can be defined at the level of the broader ecosystem or country, and they compete against each other for attention, talent, and other resources. ...
... Preliminary analyses showed that a parametric Gompertz model maximized model fit over other parametric or non-parametric specifications. Unlike an exponential model that assumes a time-constant transition rate, a Gompertz model allows the baseline transition rate to change monotonically with time (Klepper, 2002;Link and Scott, 2003). A transition rate that starts low and then accelerates is theoretically in line with the dynamics of a setting where spinoffs receive considerable support from the parent university, face long development times (Mathisen and Rasmussen, 2019), and have relatively low failure rates at their early stages (Croce et al., 2014). ...
... Voluminous research in organizational ecology (Carroll and Hannan, 1989;Carroll and Swaminathan, 2000), industrial organization (Gort and Klepper, 1982;Klepper, 2002), and technology evolution (Argyres et al., 2015;Suarez and Utterback, 1995) has found evidence of an inverse U-shaped pattern of population density and a U-shaped pattern of organizational mortality that characterizes the evolution of diverse industries. Our analyses confirmed these patterns in the context of university spinoffs in England and Scotland. ...
We study failures between 1993 and 2017 in the complete population of 1731 English and Scottish university spinoffs founded since 1977. We borrow and expand the concept of density dependence from organizational ecology to theorize that a spinoff's propensity to fail is affected by the number of spinoffs active not only in the aggregate population but also within its parent university's portfolio. We contribute to organizational theory, demonstrating the importance of organizational groups that form within larger populations on individual organizations' propensity to fail. We contribute to literature on academic entrepreneurship showing that, for most universities, spinoff portfolio growth can lower associated spinoffs' failure rates, but that such effects need to be juxtaposed to the aggregate population's finite capacity to support an expanding number of spinoffs.
... Related to this literature, a large body of research has focused on firm entry and exit over and (iii) priorities and allocations, in which the President can require companies to prioritize and accept contracts for specific goods and services (Congressional Reserach Service, (2020a)). technological change and discontinuities, including in response to industry-disrupting technologies (Christensen, 1997) and over industrial and product life cycles (Gort and Klepper, 1982;Klepper and Graddy, 1990;Agarwal and Gort, 1996;Klepper, 1996, Klepper andSimons, 2000;Agarwal and Bayus, 2002;Klepper, 2002). To date, less has been written on shorter-term economic dynamism in the context of crisis-induced demand spikes and/or supply shortages. ...
... 16 These 14 Importantly, while we attempted to be as thorough as possible, this representation does not capture the full universe of firms that have pivoted, as some firms may have bought machines and never incorporated or announced a change. 15 Previous academic work (Gort and Klepper, 1982;Jovanovic and MacDonald, 1994;Klepper and Simons, 2000;Agarwal and Bayus, 2002;Klepper, 2002;Agarwal and Bayus, 2007) has utilized the Thomas Register of American Manufacturers to compile annual data on US-based producers of specific products. These papers supplement data from the Thomas Register with other sources, such as data from the firms, to study firm entry, exit, and the evolution of market structures. ...
... 31 While individual SMEs often lacked the entire suite of capabilities necessary to both operationalize manufacturing and break into and contribute to traditional markets, our results suggest that the most successful ones leveraged network partnerships with both small and large companies, and sometimes public entities, to successfully break into high-volume markets and bring new products to the market. This rare persistence of firm performance (Dosi et al., 2020) and leveraging of external networks to fill competency gaps potentially being a precursor of success are consistent with the existing literature on how SMEs can leverage prior founder experience, knowledge, and networks to facilitate entry, increase survival, and mediate the impact of size Klepper, 2002;Dencker et al., 2009;Sosa, 2012). It also speaks to the characteristics that may be necessary for a successful role for government in facilitating entry to support short-term economic dynamism during crises. ...
This paper investigates the role of short-term economic dynamism in responding to crisis induced supply shortages. We focus on the domestic manufacturing ramp-up of surgical masks, respirators, and their intermediary products in response to the COVID-19 pandemic. We develop a novel method for timely identification and validation of the evolving state of domestic manufacturing. To unpack the activities of domestic manufacturers and related institutions, we triangulate across 56 qualitative interviews, certifications, Thomasnet.com®, industry associations, and other public data. We find that while large manufacturers could rapidly scale up, onshore, or diversify production to enter into domestic production of critical medical supplies, these large manufacturers alone were insufficient to meet the spike in demand. In face of this shortage, small and medium enterprises (SME), who entered into mask and respirator production as de novo firms, spin-offs, and by diversifying, were important in increasing overall domestic capacity and serving markets unmet by large hospital distributors. These firms often had fewer competencies and resources compared to larger firms, and received less effective government support. Despite these disadvantages, a number of SMEs succeeded in entering into domestic production, and our interviews suggest this capacity could have been better integrated into the national response. We propose new theory for how and when federal and state governments should support short-term economic dynamism (firm entry into target products and/or markets) during crises to address supply shortages, and the types of market and network failures federal or state governments may be most effective at addressing.
... Furthermore, diversifying entrants with experience from related industries tend to do well in emerging industries compared with entrepreneurial ventures (Helfat and Lieberman, 2002;Klepper, 1996Klepper, , 2002. Successful firms possess resources and distinctive core competencies, including capital, technology, specialized skills, and routines acquired from experience in similar activities that can be leveraged into other markets and industries (Boschma and Wenting, 2007;Mäkitie, 2020). ...
... Successful firms possess resources and distinctive core competencies, including capital, technology, specialized skills, and routines acquired from experience in similar activities that can be leveraged into other markets and industries (Boschma and Wenting, 2007;Mäkitie, 2020). This notion is conceptualized in the evolutionary economic geography literature (partly building on Klepper's heritage theory (Klepper, 2002) as industrial relatedness (Boschma, 2017). In addition to the effect of specialized capabilities that can be reutilized in a different sector, more generalized pre-entry resources and capabilities are likely to affect the market choices of diversifying entrants. ...
... [In the Arkona project] EON had typically more experience than us in operating wind parks and we saw the potential in learning from them" (Rummelhof, 2016). However, industrial relatedness, meaning the company's pre-entry experiences (Boschma and Wenting, 2007;Klepper, 2002) in subsea, offshore marine operations, and in managing large and complex project, as well as network of suppliers meant that "Offshore wind was at the heart of [Equinor's] competence, [and] a natural progression from O&G" (Rummelhof,2016). Equinor's Hywind concept, for instance, relies on an established technology from offshore O&G operations-the spar buoy, modified to fit the floating OWP context (interview, 2017). ...
Global production networks (GPN) research has given limited attention to lead firms' competitive strategies in emerging project-based industries (PBIs). Informed by the industry life cycle approach, the authors develop a process-sensitive approach that unpacks the black-boxed notion of lead firms' competitive capabilities development processes to address this gap. The approach is operationalized in the analysis of the evolutionary trajectories of Ørsted (Denmark) and Equinor (Norway) in the emerging offshore wind power industry. Analytically, the authors differentiate between lead firms' pre-entry, entry, and post-entry scope-related and scale-related competitive capabilities development processes. They demonstrate how these processes are shaped by industry characteristics and co-evolve with broader industry developments and extra-firm dynamics. Through this novel perspective, the paper extends conventional wisdom on the role GPNs as facilitators of knowledge transfer and of local and regional capability formation and development. The authors argue that GPNs can also facilitate both knowledge transfer to and competitive capability formation by (lead) firms.
... Successful firms possess resources and distinctive core competencies, including capital, technology, specialized skills, and routines acquired from experience in similar activities that can be leveraged into other markets and industries (Boschma and Wenting, 2007). This notion is conceptualized in the evolutionary economic geography literature (partly building on Klepper's heritage theory (Klepper, 2002) as industrial relatedness (Boschma, 2017). In addition to the effect of specialized capabilities that can be reutilized in a different sector, more generalized pre-entry resources and capabilities are likely to affect the market choices of diversifying entrants. ...
... [In the Arkona project] EON had typically more experience than us in operating wind parks and we saw the potential in learning from them" (Rummelhof, 2016). However, industrial relatedness, meaning the company's pre-entry experiences (Boschma and Wenting, 2007;Klepper, 2002) in subsea, offshore marine operations, and in managing large and complex project, as well as network of suppliers meant that "Offshore wind was at the heart of [Equinor's] competence, [and] a natural progression from O&G" (Rummelhof,2016). Equinor's Hywind concept, for instance, relies on an established technology from offshore O&G operations-the spar buoy, modified to fit the floating OWP context (interview, 2017). ...
Global production networks (GPN) research has given limited attention to lead firms' competitive strategies in emerging project-based industries (PBIs). Informed by the industry life cycle approach, the authors develop a process-sensitive approach that unpacks the black-boxed notion of lead firms' competitive capabilities development processes to address this gap. The approach is operationalized in the analysis of the evolutionary trajectories of Ørsted (Denmark) and Equinor (Norway) in the emerging offshore wind power industry. Analytically, the authors differentiate between lead firms' pre-entry, entry, and post-entry scope-related and scale-related competitive capabilities development processes. They demonstrate how these processes are shaped by industry characteristics and co-evolve with broader industry developments and extra-firm dynamics. Through this novel perspective, the paper extends conventional wisdom on the role GPNs as facilitators of knowledge transfer and of local and regional capability formation and development. The authors argue that GPNs can also facilitate both knowledge transfer to and competitive capability formation by (lead) firms.
... It therefore seems normal that Gazelles in mature industries grow through acquisitions of less efficient competitors. Klepper (2002) provides many interesting examples in this regard. The US automobile industry consisted of 271 firms in 1909. ...
... 40 Further support of our conclusions that different views are complementary in the two discussions is given by the increasing evidence that turbulence in itself, i.e., the entry and exit of firms, boosts job creation (e.g., Bartelsman et al. 2004Bartelsman et al. , 2005Brown et al. 2006;Birch 2006;Fogel et al. 2008;Caballero 2007). Turbulence is a natural effect of an accelerated search for new business opportunities and a rapid reallocation of resources from unsuccessful to successful firms, and when an industry evolves and becomes more mature it is natural that the market selection process reduces the number of firms, in some cases to a very small number (Klepper 2002). This implies that an employment-enhancing policy should aim at lowering barriers to new firm entry and firm exit to support an experimental process increasing the number of trials (new firms) from which potential Gazelles can be recruited, and not hindering the closure of failures. ...
It is often claimed that small and young firms account for a disproportionately large share of net employment growth. We conduct a meta-analysis of the empirical evidence regarding whether net employment growth rather is generated by a few rapidly growing firms-so-called Gazelles-that are not necessarily small and young. Gazelles are found to be outstanding job creators. They create all or a large share of new net jobs. On average, Gazelles are younger and smaller than other firms, but it is young age more than small size that is associated with rapid growth. Gazelles exist in all industries. They seem not to be overrepresented in high-technology industries , but there is some evidence that they are overrepresented in services.
... Evolving "red" industries The focus here is on industries in the position of being "a seller among very many" (Machlup, 1952, p. 85); in other words, they have reached maturity without taking on an oligopolistic configuration (Klepper, 2002a). Such a polypolistic structure is common to many industries today, and a far cry from the model of perfect competition because it includes firms of very different dimensions wielding different amounts of market power. ...
... Scholars of industrial organization and evolutionary economics have paid great attention to this oligopolistic transformation, in general, or in relation to specific industries. In particular, studies taking a historical perspective have highlighted how an oligopolistic structure is the result of a differential growth achieved by firms able to interact with their competitive environment from an advantageous position because of capabilities accumulated over time (Dekkers, 2005;Izzo, 2017;Klepper, 2002a;Klepper and Simons, 2000;Malerba et al., 2016). ...
Purpose – Variation, replication and selection processes are acknowledged as key constructs in studies on how industries evolve, but no theoretical and empirical contributions have applied these key constructs to analyzing industries in specific stages of their history. This paper aims to fill this gap, taking for reference the firm and its strategic action in particular.
Design/methodology/approach – After delineating and discussing the three processes of interest – variation, replication and selection – this paper analyzes three very different evolutionary contexts: “red” industries, that reached maturity maintaining a polypolistic structure, and that continue to evolve in this phase; the oligopolistic transformation undergone by certain industries; and the emergence of new market spaces around new products developed by firms.
Findings – Variations are mainly reactions to the competitive environment in the evolution of red industries or environment-modifying in the case of industries evolving toward an oligopoly, and in the creation of new market spaces. Horizontal replication through employee mobility prevails in red industries, while in the other two contexts firms driving the evolution raise barriers to replication, inhibiting both horizontal and vertical replication. While selection does not come about in a new market space as long as the barriers erected by the first comer remain in place, it occurs in the form of subset selection in the other two settings.
Originality/value – This paper takes an entirely novel approach and proposes a pluralist framing of how industries evolve, interpreting the different evolutionary situations on the strength of the key variables of variation, replication and selection.
... The ultimate criterion for firm performance is the firm's survival [8]. And the length of survival is one of the most widely used measures of firm performance [9]. The earlier studies emphasize the entry and exit of the firms, focusing more on the impact of the firm's entry process, the exit risk and entry on market performance, and treated the survival process between the entry and exit as a "black box", and less on post-entry performance [10]. ...
... 2) There is no significant difference in survival probability between earlier and later entrants of large-scale logistics enterprises. This is different from Klepper [9], who did not consider interaction effect between firm size and entry timing had found the earlier manufacturers entered the US automobiles, tire, television, and penicillin industries, the lower hazards they faced. The possible reason is that the earlier entrants with large-scale in logistics were mostly state-owned enterprises, which underwent a change of ownership during the reform and opening-up process and became new enterprises. ...
... Previous studies concentrate on how technological innovation serves as a key driver of economic development, enhancing labor productivity and catalyzing the optimization of industrial structure [16]. Although existing empirical studies confirm the role of technological innovation in improving product quality [17]; diversifying product ranges, and thus fostering industrial upgrading [18]; and emphasize that this innovation-centric approach not only supports industrial upgrading but also significantly enhances product export competitiveness [19,20], most existing research focuses on the impact of technological innovation on the export competitiveness of the high-tech industry; that is, from an overall industrial perspective [21,22]. ...
This study investigates the pivotal role of technological innovation in enhancing the export competitiveness of high-tech products in China, analyzing its interplay with industrial upgrading. Theoretically, it contributes to the understanding of how technological innovation affects high-tech product markets, offering a novel product-centric perspective distinct from traditional industry-focused views. Set against China’s shift toward a dual circulation development paradigm, the research utilizes a panel regression model to analyze data from 30 Chinese provinces, cities, and autonomous regions from 2011 to 2021. The findings underscore the significant positive impact of technological innovation on export competitiveness, with variances noted across Eastern, Central, and Western regions. The study reveals that technological innovation primarily influences the global competitiveness of high-tech products through industrial upgrading. Policy recommendations emphasize strengthening technological innovation, enhancing education and government support, leveraging regional strengths, and achieving a balance between internal innovation capabilities and market openness. The findings suggest these strategies are crucial for enhancing export performance in the global market for high-tech products.
... This category has been widely used as a proxy for industry (Allison et al., 2017;Butticè et al., 2017;Oo et al., 2019;Scheaf et al., 2018). The most prominent change that an entrepreneur could make when relaunching is to change industry (Delmar & Shane, 2006;Klepper, 2002). Findings in the previous literature suggest that many entrepreneurial skills are industry-specific (Delmar & Shane, 2006) and changing industry might have an adverse effect on performance (Eggers & Song, 2015). ...
We investigate the narcissists’ response to failure and whether narcissists effectively learn from this negative experience. To address this, we leverage data from a leading crowdfunding platform, and analyze 116,981 failed crowdfunding attempts. Our analysis shows a positive relationship between narcissism and the probability of relaunching which is negatively moderated by the degree of failure. Indeed, due to their fragility, narcissistic entrepreneurs are more likely to engage in ego-defensive behavior, and thus, they are less likely to relaunch following high degrees of failure. Moreover, narcissistic entrepreneurs exhibit poorer performance in their subsequent endeavors. This underperformance is driven by external attribution of failure and lower levels of pro-activity. In fact, following failure, narcissistic entrepreneurs are less likely to change internal factors that might contribute to their previous failure and they are more likely to respond to failure by reattempting in a different context. Managerial and policy implications are discussed.
... It also expands the production scale of an industry, extends the industrial chain, reduces manufacturing costs and prices, and facilitates the transfer of labour in industrial sectors. Thus, the adjustment and upgrading of the industrial structure will be promoted through the linkage and transmission mechanism between industries (Bulu, 2014;Klepper, 2002;Naimzada and Randon, 2007). In addition, new technologies promote the technological transformation and renewal of traditional industries so that emerging industries can grow alongside traditional industries (Ding and Chen, 2019;Pascali, 2017;Zhao et al., 2021). ...
... Accordingly, the improvement in EE can be considered from TI and IU . TI is an effective approach for developing countries to achieve IU (Klepper, 2002;Shi & Zhao, 2018). The economic benefits of IU primarily stem from the technological advancement within the industry (Chen et al., 2016). ...
In the past decades, resource shortage and environmental degradation due to rapid economic development have become a severe challenge while limiting China’s regional sustainable and coordinated development. This paper provides a case study of Jiangsu Province in China employing the coupling coordination model and geo-detector model to seek solutions for realizing the region coordinated development from the interaction of technological innovation (\({\text{TI}}\)), industrial upgrading (\({\text{IU}}\)) and eco-environment (\({\text{EE}}\)). This study reaches the following conclusions. (1) The coupling coordination degree (\(D\)) of \({\text{TI}}\)-\({\text{IU}}\)-\({\text{EE}}\) system (TIIUEES) in Jiangsu Province was general in the stage of mild unbalance. (2) The \(D\) value exhibited a positive evolutionary trend in time series. However, the backwardness of \({\text{EE}}\) constrained the regional coordination development, which led to the slow and small growth with fluctuation. (3) Spatially, the \(D\) value generally conformed to a gradient distribution from south to north, which was caused by regional internal extremely unbalanced development. (4) Economic benefits had a decisive effect on the coordinated development in TIIUEES, and the interaction of two factors could gain an “enhanced, bilinear” or even “enhanced, nonlinear” result. This study contributes to exploring the driving determinants of \(D\) value in TIIUEES based on the description of the temporal and spatial features and providing a credible reference for future research and decision-makers.
... Structural changes have been examined through various types of models. In the general equilibrium model (Mas-Colell et al., 1995), with the multi-sector endogenous growth model (Deaton, 1986;Blundell, 1988), in connection with industry life cycles (Agarwal, 1998;Agarwal & Audretsch, 2001;Klepper, 1997Klepper, , 2002, based on development economics (Rostow, 1971;Syrquin, 1988) and evolutionary economics (Harberger, 1998;Pasinetti, 1993). Furthermore, as demonstrated by the current paper, through the analysis of differences in reallocation and the development of productivity (Baily et al., 1996;Disney, et al., 2003;Foster et al., 2001;Fagerberg, 2000;Peneder, 2003;Krüger, 2008b). ...
... 2. The importance of a wide variety of technologies experimentally chosen by different firms early in the industry life cycle has been emphasized in a large literature, epitomized by Klepper (2002). We emphasize the parallel importance of a wide variety of commercialization experiments. ...
... Notwithstanding what structure the impact takes, the procedure writing-dependably presents proof that officeholder firms battle during innovative discontinuities (e.g., [71]; [47]). Regardless of the challenges introduced by radical advancement, occupants can be fruitful when they are "pre-adjusted," and their chronicled capacities and resources utilized to exploit the innovation [54]; [26]. In the particular setting of mechanical autonomy innovation, [69] present proof that the nearness of in-house clients of robots and access to relevant information will best plan firms to be adaptable and adjust to new, "more brilliant" apply autonomy innovation. ...
This article gives a prologue to artificial intelligence, apply autonomy, and research streams that analyze the monetary and hierarchical outcomes of these and related innovations. We depict the beginning examination of human-made brainpower and mechanical technology in the financial matters and the board writing and sum up the principal methodologies taken by researchers around there. Investigations of AI and mechanical innovation based on their speculation and assessment on builds of computerization, apply self-rule and machine learning. In this array of composing, the use of robotization, human-made intellectual prowess, and AI developments can be used both as free and as destitute elements. While AI, mechanical autonomy, and motorization are related thoughts, it is fundamental to think about the separation between all of these developments. In this investigation, there is additionally creating writing in monetary issues, methods, and information systems that surveys the use of AI estimations in unique. A touch of the creator in this forming utilize truncated, little extension level information to attract experiences concerning how AI impacts firms or people contingent on their aptitudes part of this work examines whether and how the use of AI and AI mechanical assemblies affects solitary inclinations. Further in the exploration, progressively express to the board analysts, we need a point by point understanding about how AI and mechanical self-governance impact work. It fuses not precisely how AI and mechanized innovation change a given sort of work or occupation, yet also how modernized thinking and apply independence impact how individuals associate in the workplace. That is, we theorize that these headways will change the kind of work that we do, and how that work is arranged and made as a massive part of an increasingly conspicuous creation structure. We examine the ramifications of artificial intelligence, robotics, and computerization for the hierarchical plan and firm method, contend for more outstanding commitment with these points by authoritative and technique specialists, and diagram bearings for future research.
... Product differentiation is therefore a typical measure to stabilize profit margins in markets with only a few, large oligopolists remaining as producers after a more or less ruinous shake-out phase. According to the theory of industrial life cycles, a market structure like this is typical for mature industries [23]). Dwindling profit margins are the reason for why decision-makers in established businesses look for new profitable business opportunities, anticipating or reacting to an emerging profitability crisis in the industry. ...
The fact that innovative capitalism needs institutional co-evolution has widely been recognized with respect to pro-active institutional adaptations. Examples are the rearrangement and safeguarding of supply chains or the creation of public institutions providing indispensable systemic infrastructure. These adaptations facilitate the innovative expansion of capitalism. Less attention has been paid to the fact that institutional co-evolution is also necessary where the repercussions of major innovative breakthroughs trigger social tensions and environmental damages or ecological hazards. The present paper is therefore devoted to an investigation of the latter kind of institutional co-evolution. These adaptations are usually reactive ones because critical side effects of innovations often only turn out with a delay. The causal nexus between the dynamics of innovative capitalism and the emergence of critical situations that require re-active institutional adaptations will be discussed by means of two examples. One is the crisis of the global commons, most notable the global climate change. The other example is the recent mass migration crisis. Finally, the policy options regarding necessary institutional adaptations will briefly be outlined for the two examples.
... A second mechanism linking related variety and new firms' creation and performance is skills matching. The evidence shows that new firms struggle to survive during the first years (Klepper, 2002) and that the risk of new firms´failure comes mostly from a constrained access to specialized entrepreneurial resources (Nichter and Goldmark, 2009). ...
A central question in Evolutionary Economic Geography is why regions differ in their ability to diversify and thus retain or expand their competitive position. Economic geography has generally tackled this question linking initial regional industrial structures with the emergence of new economic specializations. In this article, we argue that entrepreneurship is a key and largely overlooked mechanism of regional diversification, which has been shown to be eased by industrial related variety, but at the same time dampened by the weak linkages between the mining industry and the local economy. We analyze whether related variety is an enabling condition for entrepreneurship in mining regions. Using an unbalanced panel of around 187,000 new firms created between 2005 and 2011 in Chile, we show that related variety favors new firms’ creation, sales, and employment in non-mining regions, but not in mining regions. The results indicate that, due to the absence of pro-entrepreneurship effects of a relatedly-varied structure, mining regions face particularly challenging conditions for an entrepreneurship-based diversification process. Place-based policies attracting external knowledge, reinforcing territorial embeddedness of mining assets, and strengthening local absorptive capacity can help creating new development paths in mining regions driven by local entrepreneurs.
... Moreover, regularly introducing novel products to customers and incorporating state-of-the-art technology expands market size (Lau, 2011;Schilling and Hill, 1998), while customers' repeat purchases of new products increase market share (Prajogo and Sohal, 2003). Furthermore, an innovation pioneering strategy creates economies of scale from research and development and manufacturing operations (Klepper, 2002), which can help mitigate competitors' imitative behavior (Romer, 1990) and achieve sustained competitive advantage (Ozkaya et al., 2015). ...
Market knowledge competence is a critical factor in achieving new product development (NPD) success. Although there is abundant literature regarding the linkage of market knowledge and NPD performance, it is not clear how market knowledge competence and innovation pioneering strategy are related in driving NPD success and whether this mechanism varies by region. To this end, this research draws on organizational learning theory and the resource-based view to develop and test a conceptual framework, which predicts that (i) innovation pioneering strategy mediates the relationship between market knowledge competence and NPD success and (ii) regional differences exist in the mediation effects of innovation pioneering strategy between North America and Asia. To test this framework, we use data from the 2012 Comparative Performance Assessment Study that was conducted by the Product Development and Management Association. Findings show that innovation pioneering strategy fully mediates the relationship between market knowledge competence and NPD success with firms from North America. However, this mediation effect is not significant with samples from Asia. Competitor knowledge competence, noticeably, is found to be positively associated with innovation pioneering strategy adoption and to directly exert a positive impact on NPD success in Asia. A cross-region comparison reveals that in North America, the innovation pioneering strategy is more effective in enhancing NPD success than in Asia. This paper bridges separate literatures on market knowledge competence and innovation pioneering strategy and contributes to the NPD success literature. The findings suggest managers should carefully develop a product innovation strategy to fully reflect firms' market knowledge competence. We further recommend that managers should be aware of the unique contextual characteristics and distinct innovation sources in Asia.
... Company shake outs that can be seen in this phase are not only driven by the inferiority of technological solutions but by consolidation to increase economic efficiency. Also results of various industry studies suggest first mover advantages with longer survival rates of early market participants (see also Klepper 2002). ...
This volume presents selected contributions from the 2018 conference of the International Schumpeter Society (ISS). The selected chapters in this volume reflect the state-of-the-art of Schumpeterian economics dedicated to the three conference topics innovation, catch-up, and sustainability. Innovation is driving catch-up processes and is the condition for a transformation towards higher degrees of sustainability. Therefore, Schumpeterian economics has to play a key role in these most challenging fields of human societies’ development in the 21st century. The three topics are well suited to capture the great variety of issues, which have the potential to shape the scientific discussion in economics and related disciplines in the years to come.
The presented contributions show the broadness and high standard of Schumpeterian analysis. The ideas of dynamics, heterogeneity, novelty, and innovation as well as transformation are the most attractive fields in economics today and offer the most prolific interdisciplinary connections now and for the years to come when humankind, our global society, has to master the transition towards sustainable economic systems by solving the grand challenges and wicked problems with which we are confronted today.
Therefore, the book is a must-read for scholars, researchers, and students, interested in a better understanding of innovation, catch-up, and sustainability, and Schumpeterian economics in general.
... Company shake outs that can be seen in this phase are not only driven by the inferiority of technological solutions but by consolidation to increase economic efficiency. Also results of various industry studies suggest first mover advantages with longer survival rates of early market participants (see also Klepper 2002). ...
It is great to launch these conference proceedings from the ISS 2018 conference held in Seoul, July 2–4, Korea. The theme of the ISS 2018 was “Innovation, Catch-up, and Sustainable Development. Keun Lee, one of the guest editors of this volume, served as the President of the Society (2016–2018) and also as the main host or Chairman of the Organizing Committee, for the Seoul conference. Actually, it took 26 years to return to Asia: the last ISS conference in Asia was held in Kyoto, Japan, in 1992. And it turned out to be a good decision for the International Schumpeter Society to return to Asia: About 380 papers were presented out of the 469 initial submissions from more than 50 nations around the world. Among these 380 presentations, there were about 90 papers presented by young scholars who are either graduate students or new Ph.D. students.
... For example, expanding the business by adding a product line/service increases the revenue stream and expands the customer base (Coad and Guenther 2013). There is evidence that the precise timing of diversification is a strategic decision and can impact a firm's survival (Baptista, Karaöz, and Leitão 2019;Bayus and Agarwal 2007;Klepper 2002;Tegarden, Echols, and Hatfield 2000). Giarratana (2004), using data on encryption software startups in the U.S., shows that the presence of specialised assets and product variety increases the likelihood of firm survival. ...
The study investigates the determinants of first-time diversification activities undertaken by about 3,000 startups in the United States. Drawing on the resource-based view, we examine the impact of resource endowment on the timing of diversification. We further examine the effect of the timing of diversification on the likelihood of firm survival and then test for persistence. The analysis offers three main insights. First, resources play a crucial role in early diversification. Second, early diversification reduces the hazard of exit from the market. Third, the positive impact of early diversification on survival attenuates after five to six years. Our study contributes to the literature on the resource-based view and firm survival. The findings have important implications for entrepreneurs, policymakers, and entrepreneurship scholars.
... When we search for factors that influence the survival of RBSOs in relation to its parental organization, in our case the Fraunhofer Society, we shall first look at general, non-RBSO-specific survival factors. For instance, Buddelmeyer et al. (2009) named the following factors: firm age (Agarwal & Gort, 2002), initial asset endowments (Agarwal & Gort, 2002;Dunne et al., 1988), prior experience of the founding team (Bruderl et al, 1992;Klepper & Simons, 2000;Klepper, 2002;Thompson, 2005), role of a parental organization (Steffensen et al., 1999;Carroll et al, 2007), as well as firm-level heterogeneity (Audretsch, 1995;Caves, 1998). When it comes to the specifics of RBSOs, it is apparent that an increasing amount of literature has investigated factors that specifically influence their performance (i.e. ...
The paper presents factors influencing the hazard rate of spin-offs, which emerged from Fraunhofer Venture, the venture capitalist of the Fraunhofer Society. To identify these survival factors, we conduct a cox proportional hazard analysis on the full set ofall 106 spin-offs that Fraunhofer Venture had in its portfolio at the time our research was conducted. We find that ventures, whichhave been funded by Fraunhofer from year one onwards, are more likely to terminate early than ventures which started independently. Furthermore, the presence of a privately-owned company as shareholder once during the lifetime of a venture has a positive effect on survival. Furthermore, paying Fraunhofer for doing research and paying license fees additionally influence the venture survival positively. However, ventures that buy Fraunhofer patents face a higher risk of hazard. We challenge our findings withrecent research results and highlight implications for professionals, policy makers and academia.
... Behaviors and strategies -firm entry and exit, growth, expansion, diversification, and consolidation of both established and new businesses -could therefore be viewed as highly context dependent. Analyses of changes in the strategy, conduct and behaviour of firms have therefore been considered to have the greatest potential to be carried out within the context of a specific industry (Klepper, 2002;McGahan & Porter, 1997). ...
Women’s entrepreneurship has received global recognition and support due to its contribution to the economy, with many initiatives focusing on entrepreneurship programs as a tool for influencing women’s perceptions and attitudes towards entrepreneurship. The socio-cultural context also plays a role, with a society’s gender role ideology determining the level of normative support and legitimacy accorded to women entrepreneurs. Based on semi-structured interviews, this study focuses on analyzing women’s entrepreneurial motives and perceptions regarding entrepreneurship programs in two different socio-cultural contexts namely Sweden and Tanzania. The study contributes to existing literature on entrepreneurial motives by identifying different non-mutually exclusive categories of ‘pull’ (personal identity, prior experiences, social mission and self achievement), ‘push’ (providing solutions) and ‘combined ‘(part-time entrepreneurs) factors that influence women’s decisions to become entrepreneurs. Second, I find that the socio-cultural context influences the prevalence of entrepreneurial motives in each context. This highlights the fact that women’s entrepreneurial motives are more nuanced and complex than the ongoing academic discourse on ‘necessity’ versus ‘opportunity’ entrepreneurs. Third, entrepreneurship programs can be viewed as having an overall positive impact on women entrepreneurs. However, what was perceived as being of value by the women entrepreneurs differed based on their entrepreneurial motives. Implications for policy and practice are also highlighted.
... Surviving firms, despite having possible different technologies for the production of their imperfectly substitutable products, would thus tend to have similar and high research capabilities. Klepper (2002) provides a compelling analysis of the process and evidence on the survival of firms with such higher R&D productivities. Similarities in the R&D productivities of firms within an industry may also arise over time because of industry-wide learning-by-doing spillovers (Irwin and Klenow (1994)), knowledge spillovers through worker mobility (Stoyanov and Zubanov (2014) and Mostafa and Klepper (2018)), and technology-sharing agreements between competitors (Petrakis and Tsakas (2018)), including cross-licensing arrangements (Choi and Gerlach (2019)). ...
The present study proposes a theoretical model that investigates how R&D productivity influences the relationship between product substitutability and R&D investment in a duopolistic market. We argue that the effects on R&D investment are more complex than the previous literature suggests. We show theoretically that, in unlevelled industries, the laggard’s R&D investment decreases with product substitutability regardless of the R&D productivity level. In sharp contrast, in levelled industries, whether R&D investment increases or decreases with product substitutability depends crucially on the level of the R&D productivity. We choose parameters and formulate testable predictions that we take to the laboratory. We find that subjects’ behavior is largely consistent with the model’s predictions.
... It promotes the expansion of emerging industries and intensifies competition between old and new markets. Furthermore, it is conducive to industrial transformation and upgrading [35]. The economic effect of industrial upgrading mainly comes from the technological progress of intra-industry [36]. ...
During the past few years, the accelerating development of economy has caused great crisis on ecological environment. The scarcity of natural resources and deterioration of environment exert harmful influence on regional sustainable development. This study aims to find the method to realize the regional coordinated development from the perspective of technological innovation (TI), industrial upgrading (IU) and ecological environment (EE) as well as their interactions. The coupling coordination model is applied to calculate the coupling coordination degree (CCD) in technological innovationindustrial upgrading-ecological environment system (TIES). Additionally, the geo-detector, a robust spatial statistics approach, is used to explore the determinants of CCD. It is found that the level of CCD is in the stage of mild imbalance during the study period. In terms of time series, it presents a slight growth with fluctuation from 0.329 to 0.354. Spatially, southern Jiangsu is in the mild imbalance stage and the coupling coordination characteristic transforms from “IU lagged” to “EE lagged”. Conversely, middle and northern Jiangsu are basic imbalance with “TI lagged”. We also find that the superposition of two factors in TIES can obtain a “enhance, bilinear” even “enhance, nonlinear” effect.
... Klepper (2002) provides many interesting examples in this regard. The U.S. automobile industry consisted of 271 firms in 1909. ...
High-growth firms (HGFs) are critical for net job creation and economic growth. We analyze HGFs using the theory of competence blocs, linking firm growth to property rights and the interaction of complementary expertise. Specifically, we discuss how the institutional framework affects the prevalence and performance of HGFs. Firm growth is viewed as resulting from the perpetual discovery and use of productive knowledge. A key element in this process is the competence bloc, a nexus of economic actors with complementary competencies that are vital in order to generate and commercialize novel ideas. The institutional framework determines the incentives for these individuals to acquire and utilize knowledge. We identify a number of institutions that foster * The authors are grateful for useful comments and suggestions from
... Behaviors and strategies -firm entry and exit, growth, expansion, diversification, and consolidation of both established and new businesses -could therefore be viewed as highly context dependent. Analyses of changes in the strategy, conduct and behaviour of firms have therefore been considered to have the greatest potential to be carried out within the context of a specific industry (Klepper, 2002;McGahan & Porter, 1997). ...
The debate about the new possibilities for primary cooperative societies to operate differently in a more self-reliant way have sparked recently. To furthering thought regarding these possibilities, we argue that cooperatives can work together to achieve unity of effort and integration could help cooperative societies accommodates the needs of members. In so doing, this chapter assesses the mode of operations among cooperative societies that were considered to implement the integrated cooperative model in Tanzania. Second, this chapter identifies the perceived benefits and challenges by cooperative members during the implementation of the model. The chapter has uncovered that primary cooperatives can be integrated horizontally or vertically or can be part of the vertical financial system involving other organizations, which may or may not be cooperatives. Moreover, findings demonstrate that the consolidation of the Integrated Co-operative Model to primary co-operative societies could unleash new possibilities for self – reliant practices and leverage on integration to enhance unity among members not only in Tanzania but also at the global scale.
... The maturity phase of ILC is marked by a shift of products process and changes of the number of films (Cohen and Klepper, 1996b;Klepper, 1996), while the interaction among institutional mechanisms, economic constraints and technological possibilities affects further expansion of the industrial scale that impedes the growth of products, market share, and the number of companies (Tushman and Murmann 1998;Murmann and Frenken 2006). During the decline stage of ILC, market share distribute to the most capable producers while sales would not grow indefinitely, which other companies withdrew from the industry, especially for those over-competition industries (Bertomeu, 2009), those small business and powerless innovators are exiting from industry (Klepper, 2002), then its recession happened (Klepper and Miller, 1995). ...
The industrial life cycle theory has proved to be helpful for describing the evolution of industries from birth to maturity. This paper is to highlight the historical evolution stage of Atlantic City's gambling industry in a structural framework covered by industrial market, industrial organization, industrial policies and innovation. Data mining was employed to obtain from local official documents, to verify the module of industrial life cycle in differential phases as introduction, development, maturity and decline. The trajectory of Atlantic City's gambling sector evolution reveals the process from the stages of introduction to decline via a set of variables describing structural properties of this industry such as product, market and organization of industry under a special industry environment in which industry recession as a result of theory of industry life cycle is a particular evidence be proved again. Innovation of the gambling industry presents the ongoing recovering process of the Atlantic City gambling industry enriches the theory of industrial life cycle in service sectors.
Scholars have long been interested in understanding how a firm’s “pre-history” shapes its behavior and performance, with recent scholarship highlighting the fact that industry entrants stem from different knowledge sources. Knowledge sources, the context in which entrants develop the knowledge they bring as they enter an industry, are argued to be important, because they may have differential effects on firm strategy and performance. We explore the effects of five different knowledge sources on firm behavior and survival using a mixed-methods approach. Survival analysis shows that user-founded new ventures outsurvive academic-founded new ventures, employee-founded new ventures, related diversifying entrants, and unrelated diversifying entrants. Qualitative analysis suggests that user-founded new ventures often enter niche markets defined by the clinical expertise of their founders and remain in these markets over time, honing their product offerings to specific clinical needs. Our analyses are based on novel, hand-collected archival data on the population of entrants in the modern medical imaging industry. We discuss the implications of these findings for the evolutionary theory, strategic management, and entrepreneurship literatures.
The way income is distributed in an economy is perhaps the most notable result of its growth patterns. Understanding the joint persistence of economic crises and changes in social inequality since 1929 is considered a great challenge. This paper tries to analyze growth and income distribution in the long run using the concept of long waves, the evolutionary concept of ‘systems’, and empirical information. We conjecture that the social system is in turn an outcome of the co-evolution of four partially autonomous subdomains: (i) technology, characterized by a paradigm whose evolution follows the shape of a ‘Schumpeterian boom’; (ii) the economy or productive system, essentially defined as the succession of intermediate-length fluctuations in investments, and strongly associated to sectoral and structural changes; (iii) science, which contributes to development by generating innovations; and (iv) institutions, which set the rules in which income distribution is framed. Following this scheme, the data reveal that income distribution is an emerging result from this ‘global social system’ and not only the result of economic productivity and technology; apparently, the weight in the income distribution of institutional factors is as relevant as economic and technological factors. Second, the long-run growth trends are most possibly non-linear and, to great extent, non-deterministic, which would support the representation of long-run phenomena as long waves. Finally, we have found that in the long period 1929–2010 and afterwards, two sub-periods are manifested, with very different regimes of income distribution: (1) 1929–1975, when inequality decreased, and (2) from 1975 to present time, when inequality increased. Concerning the years after 2010, two alternatives follow: either these correspond to the recovery phase of a new long wave, or to the end of the depression phase of our second period. In both cases, we are currently moving towards the expansionary phase of a new long wave, which will have important implications for contemporary economic policies.
Full version available for open download here: https://doi.org/10.1016/j.lrp.2023.102328
Considering the importance of technology for industrial structure upgrading, especially under the impetus of the fourth industrial revolution, the paper examines the impact of technology importation on industrial structure upgrading in 31 Chinese provinces from 2002 to 2020. It also emphasises the moderating role of institutional environment based on two dimensions of industrial upgrading. The findings indicate that technology importation has a positive effect on industrial advancement; however, its impact on industrial rationalisation is not significant. A higher-quality institutional environment can indirectly contribute to the impact of technology importation on industrial upgrading. Finally, the effects of technology importation and institutional environment on industrial upgrading vary with regions, and there are also differences in the moderating effects of different aspects of institutional quality. Therefore, the article suggests that technology should be introduced according to the institutional environment of different regions, and the government should develop personalised industrial upgrading strategies.
JEL Classification O33, O14, L16
Technological discontinuities create new submarkets in existing industries, which may favor incumbents or provide opportunities to new entrants. Complementing prior research on the emergence of integrative submarkets that leave the industry’s customer base unchanged, we introduce the notion of additive submarkets, which are characterized by enlarging the focal industry’s customer base and its heterogeneity. Our empirical analysis focuses on how the emergence of an additive submarket after a competence-destroying technological discontinuity affected entry and firm survival in the historical German farm tractor industry. Using propensity score-weighted hazard models to control for the endogeneity of entry timing, we find that diversifying entrants from customer-related industries were more likely to enter and survive after the submarket emerged. We develop a conceptual framework to structure the implications for entry and survival of various types of entrants when technological discontinuities create new integrative or additive submarkets.
p>This thesis looks at the various activities of competition authorities, such as the United Kingdom’s Office of Fair Trading or the US Federal Trade Commission, and shows examples of how a tough, competition-promoting stance can boost innovation. Each chapter considers one of the three main branches of competition policy: mergers, agreements between competitors and the conduct of dominant firms.
Chapter 2 shows how a government can foster innovation by tightening merger restrictions. A detailed model of innovation is used to show how merger policy affects market structure over the life-cycle of an industry. We show that mergers are only possible in later periods, once incumbent firms have established a technological lead over potential entrants. This means that the expectation of future rents from a relaxed merger policy encourages entry in the early stages. This can reduce R&D in the early stages and, as latter R&D builds on initial discoveries, limit innovation at the end of the life-cycle. We show that, in large markets, a government that aims to promote innovation should ban mergers when early innovation is sufficiently important for later research.
In chapter 3 we look at the effects of R&D cooperation among competing firms on technology choice. We demonstrate how firms in a duopoly can ensure that each adopts different technologies by agreeing, prior to conducting R&D, to share the results of their research. This has the effects of reducing product substitutability and thereby softening competition and increasing profits. We show that this can reduce innovation, consumer welfare and total welfare.
In Chapter 4, we look at a systems market and show how an incumbent monopoly supplier of a primary product can protect its position through the technological tying of complementary goods.</p
Studies of structure and evolution in the European trucking industry have, possibly mistakenly, predicted the shakeout of small motor carriers and argued that only large carriers will be able to create value to shippers in the long run. This prediction is based on an essentially taken-for-granted premise that in the economic theory of industry evolution, the industry life cycle approach applies to the trucking industry. This article argues that it does, in fact, not apply well to this industry, which possesses characteristics that allow for quite different competitive dynamics. The argument is illustrated empirically by a case study of the Danish trucking industry in the 1990s. The study reveals that the Danish trucking industry moves towards increasingly organized markets with a few large carriers, some specialized and flexible small and medium-sized (SME) carriers with vertical and horizontal linkages, and many small carriers and independent owner-operators serving shippers and other carriers on a short-term basis. Adopting a knowledge-based perspective, the persistent coexistence of small, medium-sized, and large carriers can be attributed to the nature and dynamics of demand, the division of labor between different motor carriers, and changes in productive resources.
History matters. Recently, there has been an increase of interest in the use of historical research in the fields of international business, management and strategy; however, the use of this approach is still underexplored when compared to the use of more quantitative methodologies. Historical research seeks the identification, location, evaluation, and synthesis of data from the past to unveil previous events and, also, to relate them to both present and future, contributing to the understanding and explanation of theories. This chapter reviews the foundations of the historical research method in international business, management, and strategy and proposes a framework to guide historical research in these fields. Contrariwise to the traditional argument that history is theory resistant, at least from an independent-dependent and a context-invariant standpoint that so often characterizes economic approaches, historical research can contribute to a better understanding of the business phenomena.
About 20 years ago Klepper (1997) has shown that the life cycle theory, initially introduced for products, can also be applied to the development of industries. The industries that were examined to establish this theory were marked by relatively stable market conditions that are typically driven by innovation. However, research on the transition of the energy system has shown that markets for new energy technologies are driven by political support. As yet an analysis of the industry life cycle of an industry which has developed under politically driven market conditions has not been conducted. Therefore this paper examines the development of the global wind energy industry and the relevance of national markets in a globalized world. The study is founded on a large empirical database. A comparative analysis of various international and national developments was conducted using descriptive statistical methods. The findings show that the global development derives from the sum of individual national developments. It reveals a strong influence of national markets on the development of their respective wind energy industry. Therefore these findings provide relevant insides for the political debate on market support mechanisms in wind energy.
In the management literature, the role of learning from experience and its effect on performance has been highlighted. However, little is known about the effects of strategic change on performance due to aspects pertaining to the mobility of learning. Building on different learning theories, we theorize about the effect of strategic change on performance when: (i) strategic change does not require the mobilizing of resources; (ii) strategic change does not involve exposure to a new set of stakeholders; and (iii) time commitment to previous strategies is low. We confront our contentions with data on serial campaign launchers in crowdfunding. The data indicates that changing industry adversely affects fundraising performance due to the specificity of a portion of the accrued learning. This adverse effect is mitigated by venture launching experience and exacerbated following failure. Implications for practitioners and scholars are discussed.
We consider the Cournot-Theocharis oligopoly model, where firms make their choices under adaptive expectations. Following [2], we assume that quantities cannot be negative, which implies that the model is nonlinear. The stability of the equilibrium point in the general case is analyzed. We focus on the conditions for which the number of competitors is reduced to a monopoly. In particular, we find necessary and sufficient conditions giving an analytic proof of the convergence to oligopoly to monopoly.
Some of the fundamental studies on competitive dynamics are based on an equilibrium relation between a firm’s performance, its competitive activity, and the levels of cooperation and competition throughout an industry. Nevertheless, research on the theory of the firm and evolutionary economics indicates that other industry participants also influence how companies take “make-or-buy” decisions that can indirectly affect the cooperative and competitive landscape at both firm and industry levels. In this paper, competition is analyzed through the lens of nonlinear dynamics, a tool that has been successfully used in the social and natural sciences because it can accurately describe complex and chaotic behaviors emerging in nature. From this perspective, all industry participants are considered independent agents, each one with sets of strategies and possible actions to take given a particular state of the world; the aggregate of those actions defines the final state of the industry. This approach is based on the understanding of the collective behavior of multiple independent agents and how feedback loops emerge from the inevitable inefficiencies inherent in complex dynamical systems.
This study investigates follower firms' make–buy sourcing choices and sequences in response to an architectural innovation by an innovator. We argue that the dynamic trade‐offs among knowledge acquisition, knowledge transformation, and transaction cost reduction underlie the performance impacts of make–buy sourcing choices and sequences across the architectural innovation life cycle. Using the data gathered from the gear‐shifting market of the U.S. bicycle industry, we empirically demonstrate that “buy” is a superior sourcing choice before key market‐winner features (i.e., dominant design) have emerged. After that, “make” becomes a superior choice. We then demonstrate that the “buy‐to‐make” sourcing sequence is associated with superior technological and financial performances in the postdominant design phase of the architectural innovation period, as well as with greater firm survival during the market shakeout in the later period of modular standardization. The theoretical and managerial implications of our findings are also discussed.
There has been a strong emphasis on identifying a distinctive purpose for entrepreneurship inquiry, perhaps more than in any other academic field. Some scholars, however, have questioned whether a distinctive purpose is a prerequisite for entrepreneurship research to be considered legitimate. Notwithstanding this debate, identifying and articulating a unique purpose of entrepreneurship research has been a popular topic among scholars as evidenced by selection of GAER awardees. Based on the citations for the GAER laureates, the award has been given to three scholars for their contributions toward a better understanding of the purpose of entrepreneurship research: Steven Klepper in 2011, Philippe Aghion in 2016, and Boyan Jovanovic in 2019. This chapter focuses on these three awardees and discusses their work, seminal contributions, acknowledging major critiques of their work and identifying unresolved issues for future research.
The economics of recombinant knowledge is a promising field of investigation. New technological systems emerge when strong cores of complementary knowledge consolidate and feed an array of coherent applications and implementations. However, diminishing returns to recombination eventually emerge, and the rates of growth of technological systems gradually decline. Empirical evidence based on analysis of the co-occurrence of technological classes within two or more patent applications, allows the identification and measurement of the dynamics of knowledge recombination. Our analysis focus on patent applications to the European Patent Office, in the period 1981-2003, and provides empirical evidence on the emergence of the new technological system based upon information and communication technologies (ICTs) and their wide scope of applications as the result of a process of knowledge recombination. The empirical investigation confirms that the recombination process has been more effective in countries characterized by higher levels of coherence and specialization of their knowledge space. Countries better able to master the recombinant generation of new technological knowledge have experienced higher rates of increase of national multifactor productivity growth.
This article summarizes the patterns of firm entry, growth, and exit in the four-digit U.S. manufacturing industries over the period 1963-1982. Entrants are disaggregated into new firms, existing firms that diversify into an industry by opening new production facilities, and existing firms that enter by altering the mix of outputs they produce in their existing plants. We examine the relative importance of different types of entrants, the persistence of industry entry and exit patterns over time, the correlation between industry entry and exit rates, and the postentry performance of entrants.
New tire innovations having been introduced, there were well over 200 tire firms in existence just after World War I. Since then the number of firms in the tire industry has steadily decreased as shown in Table I. Today, there are only 13 manufacturing firms remaining in the U. S. tire industry. The tire industry is one of the most highly concentrated industries in America. Only ten out of the top 77 manufacturing industries in the United States have concentration ratios as high as the tire industry. Production capacity of the tire plants and the production levels in the period of 1968 to 1977 are tabulated. Economic factors influencing the present structure of the tire industry are discussed with particular attention to structural changes in last ten years. 74 efs.
Proposes a theory that explains why smaller firms have higher and more variable growth rates than larger firms. Relying on employer heterogeneity and market selection to generate patterns of employer growth and failure, the model states that efficient firms grow and survive while inefficient firms decline and fail, regardless of firm size. However, firms that fail are actually firms that, if given more time to succeed, would have grown more slowly. These slow growing firms are most often smaller firms. Also provided is a behavior characterization of entry and prices in equilibrium, which is defined as a pair of functions that characterize optimal output and exit behavior of firms. (SFL)
Conventional analyses of single spell duration models control for unobservables using a random effect estimator which the distribution of unobservables selected by ad hoc criteria. Both theoretical and empirical examples indicate that estimates of structural parameters obtained from conventional procedures are very sensitive to the choice of mixing distribution. Conventional procedures overparameterize duration models. We develop a consistent nonparametric maximum likelihood estimator for the distribution of unobservables and a computational strategy for implementing it. For a sample of unemployed workers our estimator produces estimates in concordance with standard search theory while conventional estimators do not.
A dynamic noncooperative game in which firms choose output and cost-reducing investment sequences is developed. The sequences exhibit several properties of manufacturing industries. Several steady states exist. Under some reasonable conditions only industry structures in which firms have different market shares can be locally stable steady states. So the model presents one explanation of the source of differences among firms in homogeneous good oligopolies.
Competitive Behavior and Performance of Firms in the U.S. Black and White Television Set IndustryHow Technological Innovations Have Affected the Tire Industry's Structure
- Y Datta
- Image
- Strategy
DATTA, Y "Image Strategy, Competitive Behavior and Performance of Firms in the U.S. Black and White Television Set Industry." Ph.D. dissertation, State University of New York at Buffalo, 1971. DICK, J.S. "How Technological Innovations Have Affected the Tire Industry's Structure." Elastomerics, September 1980, pp. 43-48.
Concentration and Price Trends in the Rubber Tire Industry, 1930-47. Study submitted to the U.S. Federal Trade Commission
- R C Epstein
EPSTEIN, R.C. Concentration and Price Trends in the Rubber Tire Industry, 1930-47. Study submitted to the U.S. Federal Trade Commission, 1949.
Tire Industry: A HistoryWhat Do We Know About Entry
- M J French
- U S The
- P A Geroski
FRENCH, M.J. The U.S. Tire Industry: A History. Boston: Twayne Publishers, 1991. GEROSKI, P.A. "What Do We Know About Entry." International Journal of Industrial Organization, Vol. 13 (1995), pp. 421-440.