Churn, Baby, Churn: Strategic Dynamics Among Dominant and Fringe Firms in a Segmented Industry

This paper integrates and extends the literatures on industry evolution and dominant firms to develop a dynamic theory of dominant and fringe competitive interaction in a segmented industry. It argues that a dominant firm, seeing contraction of growth in its current segment(s), enters new segments in which it can exploit its technological strengths, but that are sufficiently distant to avoid cannibalization. The dominant firm acts as a low-cost Stackelberg leader, driving down prices and triggering a sales takeoff in the new segment. We identify a “churn” effect associated with dominant firm entry: fringe firms that precede the dominant firm into the segment tend to exit the segment, while new fringe firms enter, causing a net increase in the number of firms in the segment. As the segment matures and sales decline in the segment, the process repeats itself. We examine the predictions of the theory with a study of price, quantity, entry, and exit across 24 product classes in the desktop laser printer industry from 1984 to 1996. Using descriptive statistics, hazard rate models, and panel data methods, we find empirical support for the theoretical predictions

Flexible production and entry: institutional, technological, and organizational determinants

Academics, the media, and policymakers have all raised concerns about the implications of human workers being replaced by machines or software. Few have discussed the implications of the reverse: firms’ ability to replace capital with workers. We show that this flexibility can help new firms overcome uncertainty and increase entrepreneurial entry. We develop a simple real options model where permissive labor regulations allow firms to take advantage of capital-labor substitutability by replacing ‘rigid’ capital with ‘flexible’ labor. The model highlights institutional, technological, and organizational preconditions to using this flexibility. Using a large and comprehensive dataset on entry by standalone firms and group affiliates, we provide evidence in support of the model

Characterization of atomic and molecular impurity sources and transport at the tokamak edge

The characterization of impurity sources in the tokamak edge is challenging because of the highly localized nature of impurity generation. Detailed, spatially resolved, diagnostic information is needed, and three-dimensional (3-D) modeling is required for interpretation. There is also a need for a more extensive atomic and molecular data base for the conditions encountered in this region. The availability of new measurements of photon efficiencies for some relevant hydrocarbon molecules for plasma conditions typical for the tokamak edge and the development of a 3-D Monte Carlo impurities code have enabled the successful modeling of spatially resolved measurements in the vicinity of the pump limiter neutralizer plate and near the inner wall of Tore Supra

Technological diversification and new innovators in European regions:evidence from patent data

This paper assesses the impact of regional technological diversification on the emergence of new innovators across EU regions. Integrating analyses from regional economics, economic geography and technological change literatures, we explore the role that the regional embeddedness of actors characterised by diverse technological competencies may have in fostering novel and sustained interactions leading to new technological combinations. In particular, we test whether greater technological diversification improve regional ‘combinatorial’ opportunities leading to the emergence of new innovators. The analysis is based on panel data obtained merging regional economic data from Eurostat and patent data from the CRIOS-PATSTAT database over the period 1997–2006, covering 178 regions across 10 EU Countries. Accounting for different measures of economic and innovative activity at the NUTS2 level, our findings suggest that the regional co-location of diverse technological competencies contributes to the entry of new innovators, thereby shaping technological change and industry dynamics. Thus, this paper brings to the fore a better understanding of the relationship between regional diversity and technological change

The Evolution of Grocery Wholesaling and Grocery Wholesalers in Ireland and Britain since the 1930s

Studies of industry evolution are relatively scarce outside of industries defined by narrow technological bases. Studies of wholesaling are rarer still. These are curious features given that it is probable that service industries behave differently to manufacturing ones and that wholesaling is such a key function of many economies. This paper looks at the evolution of grocery wholesaling and grocery wholesalers in Ireland and Britain since 1930. It focuses on the processes and drivers of the wholesale industry. Similarities and differences between the two countries are discussed. Particular emphasis is placed on the role of government action as a triggering mechanism for change and on the role of trade associations and industry leaders in developing and following through on market and non-market strategies. The pathways of industry evolution identified differ from those seen in manufacturing. They therefore raise a number of issues for the development of understanding and conceptualisation in industry evolution studies

Growing with the market : how changing conditions during market growth affect formation and evolution of interfirm ties

Research Summary: Market conditions are known to matter for firm performance and growth. This study explores how changing levels of uncertainty and competition affect interfirm ties of entrepreneurial firms as markets transition from nascent to growth stage. Tracing 6 entrepreneurial game publishers during the growth stage of the US wireless gaming market, the findings reveal that in a growth stage market, as uncertainty decreases, certain ties of entrepreneurial firms are terminated. First, existing partners may cut ties and become competitors after entering the market directly. This is a “winner's curse” as more successful firms are more likely to entice their partners to enter the market directly. Second, ties may be terminated as prominent firms that are “overwhelmed” with too many partners cut ties with low to mediocre performance while their remaining partners enter a positive spiral of tie strength and performance. Finally, as uncertainty decreases, new firms may enter the market as competitors to prominent firms. While entrepreneurial firms with high and low performing ties to prominent partners may find ties with these new entrants attractive, those with mediocre ties to few prominent partners find this move too risky and wait for a first mover to legitimate it. Overall, the findings show that changing levels of uncertainty and competition in growth stage markets can have different consequences for firms due to heterogeneity in their ties and power relative to partners. The findings provide several contributions to literature regarding the relationship between interfirm ties, firm performance, and market evolution. Managerial Summary: Based on interviews at 6 entrepreneurial game publishers in the US and their partners, this study shows how changing levels of uncertainty and competition in growing markets can have different consequences for firms based on the different types of alliances in their portfolio and their power relative to partners. The findings highlight the importance of managing partners differently based on alliance type and goal of the partner. They advocate remaining flexible in alliance management as information asymmetries, intentions and bargaining power of partners can change and lead to abrupt alliance dissolution. They show that alliance portfolio management goes beyond a firm's capability of managing individual alliances, and provide a tool for managers to evaluate their alliance portfolios and take the necessary precautions