Are Technology-Intensive Industries More Dynamically Competitive? No and Yes

A substantial body of research in management and related public policy fields concludes that recent decades saw greater dynamic competition throughout technology-intensive (TI) industries, with widespread steady increase in TI industry and business performance instability as key implications. We set this conclusion within a broader framework of purportedly increasing dynamic competition among TI industry businesses, and then test for evidence of its performance implications in a large sample of U.S. businesses operating from 1978 to 1997 in 31 industries, with high average research and development expenditure-to-sales ratios. In the full sample, we find no evidence of sustained increase in TI industry and business performance instability, nor any evidence of significant cross-sectional differences in performance instability between TI and non-TI industry businesses over these 20 years. For a small segment of very high-performing businesses from TI industries, however, we do uncover evidence of declining performance stability and cross-sectional differences in performance stability. We conclude that assumptions of widespread long-term increase in dynamic competition lack robust evidentiary support. It is premature to embrace and apply broadly new theoretical perspectives, management practices, and public policies to TI industry competitive dynamics that may be slightly changed since the late 1970s. Yet, there may be increasing dynamic competition among very high-performing TI industry businesses. In that small realm, careful application of new perspectives, practices, and policies may lead to deeper insight on business behavior and performance in TI industries.