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The Role of Pre-Entry Experience, Entry Timing, and Product Technology Strategies in Explaining Firm Survival

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  • Barry L. Bayus

    () (Kenan-Flagler Business School, University of North Carolina, Chapel Hill, North Carolina 27599)

  • Rajshree Agarwal

    () (College of Business, University of Illinois at Urbana-Champaign, Champaign, Illinois 61822)

Abstract

Studying the U.S. personal computer industry from its inception in 1974 through 1994, we address the following questions. What product technology strategies increase the survival chances of entrants into new, technologically dynamic industries? Does the effectiveness of these strategies differ by pre-entry experience? Does the effectiveness of these strategies differ by when firms enter a new industry? Consistent with the published literature, we find that diversifying entrants have an initial survival advantage over entrepreneurial startups. But, we find the reverse for later entrants: startups that enter later in the industry have a survival advantage over the later entering diversifying entrants. We explain this finding in terms of the firms' product technology strategies (i.e., offering products based on the technology standard and products incorporating the latest technology), pre-entry experience, and entry timing. Our findings highlight that it is crucial to study what firms do after they enter a new industry to more completely understand their ultimate performance.

Suggested Citation

  • Barry L. Bayus & Rajshree Agarwal, 2007. "The Role of Pre-Entry Experience, Entry Timing, and Product Technology Strategies in Explaining Firm Survival," Management Science, INFORMS, vol. 53(12), pages 1887-1902, December.
  • Handle: RePEc:inm:ormnsc:v:53:y:2007:i:12:p:1887-1902
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    File URL: http://dx.doi.org/10.1287/mnsc.1070.0737
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    References listed on IDEAS

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    Cited by:

    1. Dirk Oberschachtsiek, 2014. "Waiting to start a business venture. Empirical evidence on the determinants," Working Paper Series in Economics 293, University of Lüneburg, Institute of Economics.
    2. Kwangsoo Shin & Gunno Park & Jae Young Choi & Minkyung Choy, 2017. "Factors Affecting the Survival of SMEs: A Study of Biotechnology Firms in South Korea," Sustainability, MDPI, Open Access Journal, vol. 9(1), pages 1-18, January.
    3. Robert C. Seamans, 2012. "Fighting City Hall: Entry Deterrence and Technology Upgrades in Cable TV Markets," Management Science, INFORMS, pages 461-475.
    4. Knatko, D. & Shirokova, G. & Bogatyreva, K., 2015. "Industry choice by young entrepreneurs in different country settings: The role of human and financial capital," Working Papers 6426, Graduate School of Management, St. Petersburg State University.
    5. Valerie Revest & Alessandro Sapio, 2016. "The creation function of a junior listing venue: An empirical test on the Alternative Investment Market," LEM Papers Series 2016/32, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    6. Taylor, Margaret & Taylor, Andrew, 2012. "The technology life cycle: Conceptualization and managerial implications," International Journal of Production Economics, Elsevier, vol. 140(1), pages 541-553.
    7. Cefis, Elena & Marsili, Orietta, 2012. "Going, going, gone. Exit forms and the innovative capabilities of firms," Research Policy, Elsevier, vol. 41(5), pages 795-807.
    8. repec:enr:rpaper:0017 is not listed on IDEAS
    9. Bohnsack, René & Pinkse, Jonatan & Kolk, Ans, 2014. "Business models for sustainable technologies: Exploring business model evolution in the case of electric vehicles," Research Policy, Elsevier, vol. 43(2), pages 284-300.
    10. Deng, Ziliang & Guo, Honglin & Zhang, Weifu & Wang, Chengqi, 2014. "Innovation and survival of exporters: A contingency perspective," International Business Review, Elsevier, vol. 23(2), pages 396-406.
    11. Lalit Manral, 2015. "The demand-side dynamics of entrant heterogeneity," Journal of Evolutionary Economics, Springer, vol. 25(2), pages 401-445, April.
    12. Benjamin A. Campbell, 2013. "Earnings Effects of Entrepreneurial Experience: Evidence from the Semiconductor Industry," Management Science, INFORMS, pages 286-304.
    13. Robert Swinney & Gérard P. Cachon & Serguei Netessine, 2011. "Capacity Investment Timing by Start-ups and Established Firms in New Markets," Management Science, INFORMS, pages 763-777.
    14. repec:enr:rpaper:0020 is not listed on IDEAS
    15. Amankwah-Amoah, Joseph, 2017. "Human Capital Flows in Failing Organizations: An Integrated Conceptual Framework," MPRA Paper 80781, University Library of Munich, Germany.
    16. Yang, Chia-Hsuan & Nugent, Rebecca & Fuchs, Erica R.H., 2016. "Gains from others’ losses: Technology trajectories and the global division of firms," Research Policy, Elsevier, vol. 45(3), pages 724-745.
    17. Kim, Bongsun & Kim, Eonsoo & Miller, Douglas J. & Mahoney, Joseph T., 2016. "The impact of the timing of patents on innovation performance," Research Policy, Elsevier, vol. 45(4), pages 914-928.
    18. Lofstrom, Magnus & Bates, Timothy & Parker, Simon C., 2014. "Why are some people more likely to become small-businesses owners than others: Entrepreneurship entry and industry-specific barriers," Journal of Business Venturing, Elsevier, vol. 29(2), pages 232-251.
    19. Alexandra Tsvetkova & Jean-Claude Thill & Deborah Strumsky, 2014. "Metropolitan innovation, firm size, and business survival in a high-tech industry," Small Business Economics, Springer, vol. 43(3), pages 661-676, October.
    20. Hyytinen, Ari & Pajarinen, Mika & Rouvinen, Petri, 2015. "Does innovativeness reduce startup survival rates?," Journal of Business Venturing, Elsevier, vol. 30(4), pages 564-581.
    21. Camera, Gabriele & Gioffré, Alessandro, 2017. "Asymmetric social norms," Economics Letters, Elsevier, pages 27-30.
    22. Lamin, Anna & Dunlap, Denise, 2011. "Complex technological capabilities in emerging economy firms: The role of organizational relationships," Journal of International Management, Elsevier, vol. 17(3), pages 211-228, September.

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