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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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