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Product Strategies And Startups’ Survival In Turbulent Industries: Evidence From The Security Software Industry

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  • Andrea Fosfuri

    ()

  • Marco S. Giarratana

    ()

Abstract

This paper seeks to explore the drivers of startups’ survival in turbulent industries, characterized by high rates of entry and exit, fragmented market shares, and a rapid pace of product innovation. Specifically, the paper aims to underscore the role played by post-entry product strategies, along with their interaction, beyond that of pre-entry conditions. Based on a sample of 270 startups that entered the Security Software Industry from 1989 till 1998, we find evidence that surviving entities are those that more aggressively adopt versioning and product portfolio strategies. Interesting enough, strategic learning seems to play a major role: Focusing on one of the two product strategies commands a higher survival probability than adopting a mixed strategy.

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Bibliographic Info

Paper provided by Universidad Carlos III, Departamento de Economía de la Empresa in its series Business Economics Working Papers with number wb044816.

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Date of creation: Oct 2004
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Handle: RePEc:cte:wbrepe:wb044816

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  1. Miotti, Luis & Sachwald, Frederique, 2003. "Co-operative R&D: why and with whom?: An integrated framework of analysis," Research Policy, Elsevier, vol. 32(8), pages 1481-1499, September.
  2. Yannis Bakos & Erik Brynjolfsson, 1997. "Bundling Information Goods: Pricing, Profits and Efficiency," Working Paper Series 199, MIT Center for Coordination Science.
  3. Marc H. Meyer & Edward B. Roberts, 1986. "New Product Strategy in Small Technology-Based Firms: A Pilot Study," Management Science, INFORMS, vol. 32(7), pages 806-821, July.
  4. Marco S. Giarratana, 2003. "The Birth of a New Industry: Entry by Start-ups and the Drivers of Firm Growth. The Case of Encryption Software," LEM Papers Series 2003/28, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
  5. Gans, Joshua S. & Stern, Scott, 2003. "The product market and the market for "ideas": commercialization strategies for technology entrepreneurs," Research Policy, Elsevier, vol. 32(2), pages 333-350, February.
  6. Audretsch, David B, 1991. "New-Firm Survival and the Technological Regime," The Review of Economics and Statistics, MIT Press, vol. 73(3), pages 441-50, August.
  7. Richard Schmalensee, 2000. "Antitrust Issues in Schumpeterian Industries," American Economic Review, American Economic Association, vol. 90(2), pages 192-196, May.
  8. Gandal, Neil, 2001. "The Dynamics of Competition in the Internet Search Engine Market," Department of Economics, Working Paper Series qt0h17g08v, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
  9. Geroski, P. A., 1995. "What do we know about entry?," International Journal of Industrial Organization, Elsevier, vol. 13(4), pages 421-440, December.
  10. Barry Nalebuff, 2004. "Bundling as an Entry Barrier," The Quarterly Journal of Economics, MIT Press, vol. 119(1), pages 159-187, February.
  11. Mata, Jose & Machado, Jose A. F., 1996. "Firm start-up size: A conditional quantile approach," European Economic Review, Elsevier, vol. 40(6), pages 1305-1323, June.
  12. Kenney, Roy W & Klein, Benjamin, 1983. "The Economics of Block Booking," Journal of Law and Economics, University of Chicago Press, vol. 26(3), pages 497-540, October.
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Cited by:
  1. Grid Thoma & Salvatore Torrisi, 2007. "Creating Powerful Indicators for Innovation Studies with Approximate Matching Algorithms. A test based on PATSTAT and Amadeus databases," KITeS Working Papers 211, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy, revised Dec 2007.
  2. Cesaroni, Fabrizio & Giarratana, Marco S. & Martínez-Ros, Ester, 2012. "Technological capabilities and cost efficiency as antecedents of foreign market entry," MERIT Working Papers 049, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).

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