Firm specialisation and growth. A study of the european software industry.

Abstract

This paper analyses the process of growth and restructuring of 38 large European and US software firms during the period 1984-1992. Since the end of the 1960s, an independent software industry has emerged in the US and in Europe stimulated by technological and institutional change. Particularly, the diffusion of small computers and local area networks during the 1980s is largely responsible for the high growth rate of software market compared with other information technology segments. Moreover, software is a pervasive technology in that it tends to be used in all economic sectors. This has spurred the entry of many new firms and vertical disintegration of software activities from computer hardware manufacturing. In the 1980s a wave of M&As, joint ventures and corporate restructuring (new subsidiaries, reorganisations of divisions, etc.) took place in this industry. This paper aims to analyse the objectives of these operations (exploitation of new market opportunities or new joint research opportunities) and their directions (diversification or specialisation).