Post on 16-Apr-2018
transcript
IndustryEvolution:ImplicationsforStrategy,Innovationand
Entrepreneurship
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Rajshree AgarwalRudolph P. Lamone Chair and Professor in Strategy and EntrepreneurshipDirector, Ed Snider Center for Enterprise and MarketsRobert H. Smith School of Business, University of Maryland
FirmEvolutionNelson&
Winter(1982)
IndustryEvolutionGort and
Klepper (1982)
BiologicalEvolution
BehavioralTheoryofthe
Firm
AustrianEconomics
IndustrialOrganization
TimePaths&ProductInnovation- Gort&Klepper(1982)
No unique equilibrium number of firms, rather historical events from preceding stages drive the number of producers
Gort &Klepper 1982Internal Information
• Complementary Assets • Increase in Barriers to Entry &
Survival• Less efficient firms exit
External Information• Entrepreneurial rents
from exploiting discoveries
• High Profit Margins• Low Entry Barriers
TimePaths&ProductInnovation- Gort&Klepper(1982)Winter(1984)Routinized Regime
• Schumpeter Mark II• “Deepening” information• Established firms with existing
routines
Entrepreneurial Regime• Schumpeter Mark I• “Widening” information• Entrepreneurial entrants
FirmEvolutionNelson&
Winter(1982)
IndustryEvolutionGort and
Klepper (1982)
BiologicalEvolution
BehavioralTheoryofthe
Firm
AustrianEconomics
IndustrialOrganization
IndustryLifecyclesandFirmPerformanceAgarwal,Sarkar&Echambadi (2002)
BirthofCapabilitiesHelfat &Lieberman
(2002)
• Teece (1986)distinctionbetween– Coreand
complementarycapabilities
– Generalizedandspecializedcapabilities
Integrative or reconfiguration capabilities (Helfat and Raubitschek, 2000)
Helfat and Lieberman (2002)
FirmEvolutionNelson&
Winter(1982)
IndustryEvolutionGort and
Klepper (1982)
BiologicalEvolution
BehavioralTheoryofthe
Firm
AustrianEconomics
IndustrialOrganization
DeliberatelearningandDC
Zollo &Winter(2002)
IndustrylifecyclesandFirmPerformanceAgarwal,Sarkar&Echambadi (2002)
BirthofCapabilitiesHelfat &Lieberman
(2002)
HumanCapitalTheory
EntrepreneurialSpinoffs
Klepper (2002)
…andincorporatingpeopleinthemix
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Early Stage- User and Academic Entrepreneurs-More product innovation as a result-“Outside” information-Complements or collaborators to established firms
Stage II/III (Growth Stage)-Employee Entrepreneurship-Increasing focus on process innovation-Competing with established firms
Stage IV/V: Mature Stage-Employee entrepreneurship-Niche entry by user entrepreneurs-Process more than product innovation-Competitors, collaborators and complements
Knowledge context of entrepreneurs Agarwal and Shah (2014)
FirmEvolutionNelson&
Winter(1982)
IndustryEvolutionGort and
Klepper (1982)
BiologicalEvolution
BehavioralTheoryofthe
Firm
AustrianEconomics
IndustrialOrganization
DeliberatelearningandDC
Zollo &Winter(2002)
IndustrylifecyclesandFirmPerformanceAgarwal,Sarkar&Echambadi (2002)
BirthofCapabilitiesHelfat &Lieberman
(2002)
HumanCapitalTheory
EntrepreneurialSpinoffs
Klepper (2002)
Butwhataboutmarkets?
TechnologyEvolutionRosenberg(1982)
FirmEvolutionNelson&
Winter(1982)
IndustryEvolutionGort and
Klepper (1982)
EconomicHistory
BiologicalEvolution
BehavioralTheoryofthe
Firm
AustrianEconomics
IndustrialOrganization
MarketsfortechnologyArora,Fosfuri andGambardella(2001)
DeliberatelearningandDC
Zollo &Winter(2002)
IndustrylifecyclesandFirmPerformanceAgarwal,Sarkar&Echambadi (2002)
BirthofCapabilitiesHelfat &Lieberman
(2002)
HumanCapitalTheory
EntrepreneurialSpinoffs
Klepper (2002)
Arichevolutionarytradition
• Withinandacrosslevelsofanalysis• Butcriticalquestionsremain!
– Attheintersectionsof“enterprise”and“markets”– Forunder-examined“time”and“place”
Diggingdeeperintoindividualsandcognition
Deliberatelearninganddynamiccapabilities
Knowledgecontextsofindividuals
• Decisionmakingacrosscareerlife-cycles
(Individualevolution)
• Withinvs.acrossvarianceamongindividualsindifferentknowledge
contexts
• Theroleof“selection,”notjust“treatment”ofindividualsintocontexts
An“industry”mayrepresentsmallerclustersthatco-evolveinanecosystem
BatteryMakers
ElectricMotor
Suppliers
GeneralSuppliers
AutoFirms Dealers Consumer
ChargingStationsUtilities
Garages
Marketsforproducts,capabilitiesandcorporatecontrol
• Howmightthe“monolithic”viewofindustryevolutionbemodifiedtoencompassthe“ecosystem”view?– Roleofintegratedvs.modularfirms?– Extentofcompetitionandcooperationamongfirms?– Conceptofdominantdesign:justaboutproductdesign,oralsoaboutorganizational/ecosystemdesign?
• Whataboutcompetitioninadjacentmarkets?– GoogleandApplewereonceallies,nowfiercecompetitors
– Howdoindustriesevolveifthereismulti-marketcompetition?
Whatwestilldon’tknow…
• Typicalindustryevolutioncontextstartsatinstanceoffirstproductcommercialization
• So,wheredoindustriesthemselvescomefrom?– The“nascent”stagesofindustryevolution
• Inceptionperiodfrom“technologicalshock”tofirstproductcommercialization
• Whattypesoffirmsenter,andwhatdotheydo?– Investment,sensemakingactivities– Internaldevelopment,alliancesandacquisitions
Classic“industryevolution”trendinAgriculturalBiotechnology
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1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010
Num
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f Firm
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# commercializing firms
Moeen and Agarwal, (2017)
IncubationperiodofAgriculturalBiotechnology
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1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010
Num
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#investingfirms
#commercializingfirms
1977TechnologyBreakthrough
1995IndustryInception
IncubationStage
Moeen and Agarwal, (2017)
Marketcreationandindustryemergence
• Implicitassumption,giventhatmuchoffirm/industryevolutionliteraturehasfocusedondevelopedcountriescontext:– Potentialuse(demand)ortechnology(supply)willbetheimpetusformarketactorstoinvestinindustryemergence
• Butwhatifmarketsdon’texist,asincontextslackingcommercialinstitutions?
• Who/whatarethetriggers?– Public(non-profit)andprivateinvestments