Technological Extinctions of Industrial Firms: An Inquiry into Their Nature and Causes

After a buildup in the number of firms, new industries commonly experience a "shakeout" in which the number of firms declines sharply. Three theoretical perspectives on how technological change contributes to industry shakeouts are analyzed. The theories are used to synthesize predictions concerning technological change and industry evolution. The predictions inform an analysis of four US industries that experienced sharp shakeouts: automobiles, tires, televisions and penicillin. Using data on firm participation and innovation from the commercial inception of the four products through their formative eras, we uncover regularities in how the products evolved. The regularities suggest that shakeouts are not triggered by particular technological innovations nor by dominant designs, but by an evolutionary process in which technological innovation contributes to a mounting dominance by some early-entering firms. Copyright 1997 by Oxford University Press.

[1]  John Sutton,et al.  Sunk Costs and Market Structure: Price Competition, Advertising, and the Evolution of Concentration , 1992 .

[2]  A. R. Oxenfeldt.  Marketing practices in the TV set industry , 1964 .

[3]  R. Adkins,et al.  Industrial Renaissance: Producing a Competitive Future for America , 1984 .

[4]  S. Winter,et al.  In search of useful theory of innovation , 1993 .

[5]  James M. Utterback,et al.  Innovation, Competition, and Industry Structure , 1993 .

[6]  R. Thomas.  An Analysis of the Pattern of Growth of the Automobile Industry: 1895-1929 , 1977 .

[7]  R. Fabris.  A study of product innovation in the automobile industry during the period 1919-1962 , 1966 .

[8]  Walter P. Chrysler.  Life of an American workman , 1938 .

[9]  Daniel M. G. Raff,et al.  Making Cars and Making Money in the Interwar Automobile Industry: Economies of Scale and Scope and the Manufacturing behind the Marketing , 1991, Business History Review.

[10]  Richard N. Langlois,et al.  Explaining Vertical Integration: Lessons from the American Automobile Industry , 1989, The Journal of Economic History.

[11]  D Schwartzman.  "Innovation in the Pharmaceutical Industry". , 1978, British medical journal.

[12]  James T. Keating,et al.  The Goodyear Story , 1983 .

[13]  Basil Achilladelis,et al.  The dynamics of technological innovation: The sector of antibacterial medicines , 1993 .

[14]  Steven Klepper,et al.  The Evolution of New Industries and the Determinants of Market Structure , 1990 .

[15]  E.W. Herold.  A history of color television displays , 1976, Proceedings of the IEEE.

[16]  Raimar Richers.  The theory of economic development , 1961 .

[17]  Leonard Eldon Carlsmith.  The economic characteristics of rubber tire production , 1935 .

[18]  Clayton M. Christensen,et al.  Explaining the attacker's advantage: Technological paradigms, organizational dynamics, and the value network , 1995 .

[19]  G. Dosi.  Technological Paradigms and Technological Trajectories , 1993 .

[20]  Kim B. Clark,et al.  Architectural Innovation: The Reconfiguration of Existing Product Technologies and the Failure of , 1990 .

[21]  W. G. Evans,et al.  AUTOMATED COLORIMETRIC DETERMINATION OF 6-AMINOPENICILLANIC ACID IN FERMENTATION MEDIA. , 1965, Analytical chemistry.

[22]  J S Dick.  HOW TECHNOLOGICAL INNOVATIONS HAVE AFFECTED THE TIRE INDUSTRY'S STRUCTURE. PART 4 , 1980 .

[23]  Richard Hydell,et al.  The Productivity Dilemma: Roadblock to Innovation in the Automobile Industry. By William J. Abernathy. Baltimore: The Johns Hopkins University Press, 1978. Pp. 265. $16.00 , 1979 .

[24]  Clayton M. Christensen,et al.  Strategies for Survival in Fast-Changing Industries , 1998 .

[25]  James Rood Doolittle.  The romance of the automobile industry : being the story of its development--its contribution to health and prosperity--its influence on eugenics--its effect on personal efficiency--and its service and mission to humanity as the latest and greatest phase of transportation , 1916 .

[26]  S. Klepper,et al.  Time Paths in the Diffusion of Product Innovations , 1982 .

[27]  Reavis Cox,et al.  Competition in the Rubber-Tire Industry , 1939 .

[28]  S. Klepper.  Entry, Exit, Growth, and Innovation over the Product Life Cycle , 1996 .

[29]  Almarin Phillips,et al.  Technology and Market Structure: A Study of the Aircraft Industry , 1971 .

[30]  C. T. Calam.  Process development in antibiotic fermentations: Preface , 1987 .

[31]  A. Ferrari,et al.  Completely Automated System for Chemical Determination of Streptomycin and Penicillin in Fermentation Media , 1959 .

[32]  D. Nelson.  American Rubber Workers & Organized Labor, 1900-1941 , 1988 .

[33]  Frank Ernest Hill,et al.  Ford : the times, the man, the company , 1954 .

[34]  M. Flaherty,et al.  Industry Structure and Cost-Reducing Investment , 1980 .

[35]  P. Romer.  Increasing Returns and Long-Run Growth , 1986, Journal of Political Economy.

[36]  Harold Ambrose Katz,et al.  The decline of competition in the automobile industry, 1920-1940 , 1982 .

[37]  Gail Kenneth Renner.  The Hudson years : a history of an American automobile manufacturer , 1973 .

[38]  M. Tushman,et al.  Technological Discontinuities and Organizational Environments , 1986 .

[39]  Albert L. Elder.  The history of penicillin production , 1971 .

[40]  Dietmar P. F. Möller,et al.  The Automotive Industry , 2019, Guide to Automotive Connectivity and Cybersecurity.

[41]  William J. Abernathy,et al.  Patterns of Industrial Innovation : Technology Review , 1988 .

[42]  John Dean Gaffey,et al.  The productivity of labor in the rubber tire manufacturing industry , 1940 .

[43]  P. Dasgupta,et al.  Industrial Structure and the Nature of Innovative Activity , 1980 .

[44]  James M. Utterback,et al.  A dynamic model of process and product innovation , 1975 .

[45]  Boyan Jovanovic,et al.  The Life Cycle of a Competitive Industry , 1993, Journal of Political Economy.

[46]  William J. Abernathy,et al.  Patterns of Industrial Innovation , 1978 .

[47]  James M. Utterback,et al.  Mastering the Dynamics of Innovation , 1996 .

[48]  James M. Utterback,et al.  Dominant Designs and the Survival of Firms , 1995 .

[49]  Boris Stern.  Labor productivity in the automobile tire industry , 1933 .

[50]  内田 星美.  From the American System to Mass Production 1800〜1932/David A.Hounshell(1984) , 1988 .

[51]  Arsen J. Darnay,et al.  Market share reporter : an annual compilation of reported market share data on companies, products, and services , 1992 .

[52]  Aubrey Silberston,et al.  The Motor Industry. , 1959 .

[53]  Richard R. Nelson,et al.  Forces Generating and Limiting Concentration under Schumpeterian Competition , 1978 .

[54]  Belinda Loftus,et al.  In Search of a Useful Theory , 1988 .

[55]  D. Nelson.  Origins of the sit‐down era: Worker militancy and innovation in the rubber industry, 1934–38 , 1982 .

[56]  Michael French,et al.  Structural Change and Competition in the United States Tire Industry, 1920–1937 , 1986, Business History Review.

[57]  Philip Hillyer Smith.  Wheels within wheels : a short history of American motor car manufacturing , 1968 .

[58]  J. Schumpeter.  Capitalism, Socialism and Democracy , 1943 .

[59]  P. David.  Clio and the Economics of QWERTY , 1985 .

[60]  M. Tushman,et al.  Technological Discontinuities and Dominant Designs: A Cyclical Model of Technological Change , 1990 .

[61]  José Carlos Fariñas García.  Sunk costs and market structure: price competition, advertising and the evolution of concentration , 1993 .

[62]  Devendra Sahal,et al.  Patterns of Technological Innovation , 1984 .

[63]  Suresh Kotha,et al.  Dominant Designs and Population Dynamics in Telecommunications Services: Founding and Failure of Facsimile Transmission Service Organizations, 1965-1992 , 1995 .

[64]  Marco Iansiti,et al.  Technological Evolution, System Architecture and the Obsolescence of Firm Capabilities , 1995 .