2006 Inaugural Mays Marketing Research Camp Report
Innovation and New Product Management
Friday, April 27 2006
Mays Business School
Texas A&M University
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Barry Bayus, Roy O. Rodwell Distinguished Professor of Marketing, University of North Carolina, Chapel Hill, Product Strategies and Firm Survival: Who You Are and When You Enter Matters |
Firm Survival in Technologically Dynamic Industries
Barry Bayus, University of North Carolina, Chapel Hill
This study seeks to understand what product strategies increase the survival chances of entrants into new industries, whether the effectiveness of these strategies varies by pre-entry experience and if the effectiveness of these strategies differ by when firms enter a new industry. These questions are empirically tested on the entry and exit data of 624 firms in the personal computer industry between 1974-1994. The findings from this study suggest that established firms (DeAlios) can better navigate the early stages of a new industry, in which product technology is uncertain, by experimenting with the available product technologies. New entrants (DeNovos) can quickly respond to the availability of new product technologies during the later stages of a new industry. DeNovos using a frontier strategy have higher survival rates than DeAlios using the same strategy. Among early entrants, DeAlios using a portfolio or mainstream strategy have higher survival rates than DeNovos using the same strategy.
The Q&A can be summarized as follows:
Q. Can the findings be generalized?
R. If the model is correct, then I one would expect the findings would generalize.
Q. What is dominance by birthright in the digital camera industry?
Q. Is acquisition part of the survival rate?
R. In this kind of research, even if a company gets acquired, we consider it as continuing although the brand name may not exist.
Q. How does one know the beginning of an industry? For example; the radio industry.
R. In many industries, it is extremely difficult to know the exact beginning of the industry.
Q. Of the entrants who enter later in an industry, the start-up do better than the well-established firms
