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Preconditions, windows of opportunity and innovation strategies: Successive leadership changes in the regional jet industry

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  • Vértesy, Dániel

Abstract

We analyse the drivers of two successive leadership changes in the regional, or mid-sized jet market, a particularly dynamic segment of the commercial aircraft industry. In the first instance, Bombardier, a Canadian newcomer, assumed leadership over the incumbents, BAe and Fokker, in 1995. In 2005, the Brazilian firm, Embraer, became the market leader in terms of number of regional jet deliveries. Our theoretical framework considers discontinuities in the building blocks of sectoral innovation systems as windows of opportunity for which challenger firms can devise strategic responses allowing them to assume market leadership. It also considers preconditions as necessary capabilities limiting the number of potential challenger companies. The analysis of leadership change shows that more efficient engines and technological improvements in subsystems, changing oil prices, business cycles, liberalization of air transport services, scope clauses and government interventions provided technological, demand and regulatory windows of opportunity. Launching new aircraft families (an architectural innovation), targeting the 50- and the 100–120-seat niche markets gave first Bombardier’s CRJ family and later Embraer’s E-Jet family the leadership. The fate of failed challengers and incumbents point to the importance of incumbent traps, technological and financial capabilities, the timing of windows of opportunity, speedy strategic response, a proper evaluation of future demand and sheer luck, as long lead times and sunk costs entrap incumbents and other inadequately responding companies.

Suggested Citation

  • Vértesy, Dániel, 2017. "Preconditions, windows of opportunity and innovation strategies: Successive leadership changes in the regional jet industry," Research Policy, Elsevier, vol. 46(2), pages 388-403.
  • Handle: RePEc:eee:respol:v:46:y:2017:i:2:p:388-403
    DOI: 10.1016/j.respol.2016.09.011
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    More about this item

    Keywords

    Industrial dynamics; Leadership change; Sectoral innovation systems; Aircraft industry; Regional jets; Windows of opportunity; Technological capability accumulation; Incumbent trap; Indicators;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment; Related Parts and Equipment
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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