IDEAS home Printed from https://ideas.repec.org/p/ssa/lemwps/2003-28.html
   My bibliography  Save this paper

The Birth of a New Industry: Entry by Start-ups and the Drivers of Firm Growth. The Case of Encryption Software

Author

Listed:
  • Marco S. Giarratana

Abstract

The paper analyses the birth of the Encryption Software Industry (ESI), a new niche in the software industry. Using a Chandlerian perspective, this work reports the main facts about firm entry and growth, with a particular focus on start-up strategies and actions. Since scale economies do not play a major role in ESI, the paper investigates the different sources of firm competitive advantages. This work shows that innovation and product differentiation, along with investments in co-specialised assets, are variables strongly correlated to young firm probability to survive and grow. In so doing, we have collected highly detailed information on product introduction, US patents granted, worldwide alliances and biographical data of firm founders.

Suggested Citation

  • 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.
  • Handle: RePEc:ssa:lemwps:2003/28
    as

    Download full text from publisher

    File URL: http://www.lem.sssup.it/WPLem/files/2003-28.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Bresnahan, Timothy F. & Trajtenberg, M., 1995. "General purpose technologies 'Engines of growth'?," Journal of Econometrics, Elsevier, vol. 65(1), pages 83-108, January.
    2. Kelvin Lancaster, 1990. "The Economics of Product Variety: A Survey," Marketing Science, INFORMS, vol. 9(3), pages 189-206.
    3. Gambardella, Alfonso & Torrisi, Salvatore, 1998. "Does technological convergence imply convergence in markets? Evidence from the electronics industry," Research Policy, Elsevier, vol. 27(5), pages 445-463, September.
    4. Morck, R. & Yeung, B., 1991. "Internationalization: an Event Study," Working Papers 286, Research Seminar in International Economics, University of Michigan.
    5. David J. TEECE, 2008. "Profiting from technological innovation: Implications for integration, collaboration, licensing and public policy," World Scientific Book Chapters,in: The Transfer And Licensing Of Know-How And Intellectual Property Understanding the Multinational Enterprise in the Modern World, chapter 5, pages 67-87 World Scientific Publishing Co. Pte. Ltd..
    6. Kiefer, Nicholas M, 1988. "Economic Duration Data and Hazard Functions," Journal of Economic Literature, American Economic Association, vol. 26(2), pages 646-679, June.
    7. Blanchflower, David G & Oswald, Andrew J, 1998. "What Makes an Entrepreneur?," Journal of Labor Economics, University of Chicago Press, vol. 16(1), pages 26-60, January.
    8. James R. Markusen, 1995. "The Boundaries of Multinational Enterprises and the Theory of International Trade," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 169-189, Spring.
    9. James Bessen & Robert M. Hunt, 2007. "An Empirical Look at Software Patents," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 16(1), pages 157-189, March.
    10. Wesley M. Cohen & Richard R. Nelson & John P. Walsh, 2000. "Protecting Their Intellectual Assets: Appropriability Conditions and Why U.S. Manufacturing Firms Patent (or Not)," NBER Working Papers 7552, National Bureau of Economic Research, Inc.
    11. Scott Shane, 2001. "Technology Regimes and New Firm Formation," Management Science, INFORMS, vol. 47(9), pages 1173-1190, September.
    12. Sunder Kekre & Kannan Srinivasan, 1990. "Broader Product Line: A Necessity to Achieve Success?," Management Science, INFORMS, vol. 36(10), pages 1216-1232, October.
    13. Klepper, Steven, 1996. "Entry, Exit, Growth, and Innovation over the Product Life Cycle," American Economic Review, American Economic Association, vol. 86(3), pages 562-583, June.
    14. Holmes, Thomas J & Schmitz, James A, Jr, 1990. "A Theory of Entrepreneurship and Its Application to the Study of Business Transfers," Journal of Political Economy, University of Chicago Press, vol. 98(2), pages 265-294, April.
    15. Steven Klepper & Sally Sleeper, 2005. "Entry by Spinoffs," Management Science, INFORMS, vol. 51(8), pages 1291-1306, August.
    16. Klepper, Steven, 2001. "Employee Startups in High-Tech Industries," Industrial and Corporate Change, Oxford University Press, vol. 10(3), pages 639-674, September.
    17. Wagner, Joachim, 1994. "The Post-entry Performance of New Small Firms in German Manufacturing Industries," Journal of Industrial Economics, Wiley Blackwell, vol. 42(2), pages 141-154, June.
    18. 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.
    19. Riccaboni, Massimo & Pammolli, Fabio, 2002. "On firm growth in networks," Research Policy, Elsevier, vol. 31(8-9), pages 1405-1416, December.
    20. von Hippel, Eric, 1990. "Task partitioning: An innovation process variable," Research Policy, Elsevier, vol. 19(5), pages 407-418, October.
    21. Cohen, Wesley M & Levinthal, Daniel A, 1989. "Innovation and Learning: The Two Faces of R&D," Economic Journal, Royal Economic Society, vol. 99(397), pages 569-596, September.
    22. Geroski, P. A., 1995. "What do we know about entry?," International Journal of Industrial Organization, Elsevier, vol. 13(4), pages 421-440, December.
    23. Suresh Kotha & Violina P Rindova & Frank T Rothaermel, 2001. "Assets and Actions: Firm-Specific Factors in the Internationalization of U.S. Internet Firms," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 32(4), pages 769-791, December.
    24. Wilfred J. Ethier, 1986. "The Multinational Firm," The Quarterly Journal of Economics, Oxford University Press, vol. 101(4), pages 805-833.
    25. Audretsch, David B, 1991. "New-Firm Survival and the Technological Regime," The Review of Economics and Statistics, MIT Press, vol. 73(3), pages 441-450, August.
    26. Morck, Randall & Yeung, Bernard, 1992. "Internalization : An event study test," Journal of International Economics, Elsevier, vol. 33(1-2), pages 41-56, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Rui Baptista & Joana Mendonça, 2010. "Proximity to knowledge sources and the location of knowledge-based start-ups," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 45(1), pages 5-29, August.
    2. García-Villaverde, Pedro M. & Ruiz-Ortega, María J. & Ignacio Canales, J., 2013. "Entrepreneurial orientation and the threat of imitation: The influence of upstream and downstream capabilities," European Management Journal, Elsevier, vol. 31(3), pages 263-277.
    3. Paulo Nunes & Zélia Serrasqueiro & João Leitão, 2013. "Assessing the nonlinear nature of the effects of R&D intensity on growth of SMEs: a dynamic panel data approach," Journal of Evolutionary Economics, Springer, vol. 23(1), pages 97-128, January.
    4. Iain M. Cockburn & Megan J. MacGarvie, 2011. "Entry and Patenting in the Software Industry," Management Science, INFORMS, vol. 57(5), pages 915-933, May.
    5. Giarratana, Marco S. & Fosfuri, Andrea, 2004. "Product strategies and startups' survival in turbulent industries: evidence from the security software industry," DEE - Working Papers. Business Economics. WB wb044816, Universidad Carlos III de Madrid. Departamento de Economía de la Empresa.
    6. repec:bpj:erjour:v:7:y:2017:i:3:p:16:n:3 is not listed on IDEAS
    7. repec:gam:jsusta:v:10:y:2018:i:3:p:602-:d:133506 is not listed on IDEAS
    8. Ashish Arora & Anand Nandkumar, 2007. "Securing Their Future? Entry And Survival In The Information Security Industry," NBER Working Papers 13634, National Bureau of Economic Research, Inc.
    9. Nerine Mary George & Sergey Anokhin & Vinit Parida & Joakim Wincent, 2015. "Technological advancement through imitation by industry incumbents in strategic alliances," Chapters,in: Innovation and Entrepreneurship in the Global Economy, chapter 3, pages 65-88 Edward Elgar Publishing.
    10. repec:eee:jbrese:v:86:y:2018:i:c:p:190-201 is not listed on IDEAS
    11. M'Chirgui, Zouhaïer, 2009. "Dynamics of R&D networked relationships and mergers and acquisitions in the smart card field," Research Policy, Elsevier, vol. 38(9), pages 1453-1467, November.
    12. repec:spr:scient:v:71:y:2007:i:3:d:10.1007_s11192-007-1689-9 is not listed on IDEAS
    13. Lechevalier, Sébastien & Nishimura, Junichi & Storz, Cornelia, 2014. "Diversity in patterns of industry evolution: How an intrapreneurial regime contributed to the emergence of the service robot industry," Research Policy, Elsevier, vol. 43(10), pages 1716-1729.
    14. Hyytinen, Ari & Maliranta, Mika, 2013. "Firm lifecycles and evolution of industry productivity," Research Policy, Elsevier, vol. 42(5), pages 1080-1098.
    15. repec:taf:oabmxx:v:3:y:2016:i:1:p:1258135 is not listed on IDEAS
    16. Ashish Arora & Alfonso Gambardella & Laura Magazzini & Fabio Pammolli, 2009. "A Breath of Fresh Air? Firm Type, Scale, Scope, and Selection Effects in Drug Development," Management Science, INFORMS, vol. 55(10), pages 1638-1653, October.
    17. Gambardella, Alfonso & Giarratana, Marco S., 2013. "General technological capabilities, product market fragmentation, and markets for technology," Research Policy, Elsevier, vol. 42(2), pages 315-325.
    18. Christensen, Jens Froslev & Olesen, Michael Holm & Kjaer, Jonas Sorth, 2005. "The industrial dynamics of Open Innovation--Evidence from the transformation of consumer electronics," Research Policy, Elsevier, vol. 34(10), pages 1533-1549, December.
    19. Arora, Ashish & Gambardella, Alfonso, 2010. "The Market for Technology," Handbook of the Economics of Innovation, Elsevier.

    More about this item

    Keywords

    Entry; Entrepreneurship; Innovation; Software.;

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ssa:lemwps:2003/28. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (). General contact details of provider: http://edirc.repec.org/data/labssit.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.