No abstract

The economic, population ecology and strategic perspectives on firm survival are here complemented by viewing the same phenomenon from the viewpoint of technology evolution as well. The hypothesis tested is that the competitive environment of an industry, and therefore the survival of firms in it, is substantially affected by the evolution of the technology on which it is based. Survival analysis is applied to data from six industries. The results show that by explicitly including technology as a dynamic and strategic variable our understanding of firms' survival potential and success can be enhanced.

1How is changing product and process technology related to competition and industry structure? Although in recent years there has been increased interest in the subject (see, for instance, the work of the MIT Commission on Productivity, 1989), few scholars have examined the links between production processes and process improvements and productivity advances and competitiveness. Fewer still have looked at product technology or the relationships between product technology and their enabling processes and corporate strategy and competitiveness. Our contention is that these questions are central to understanding questions of larger scope such the long term success or failure of firms and even industries. Our purpose in this article is both to begin to explore the issues embedded in the dynamics of technological change and competitiveness and to present some evidence about patterns of innovation in products and processes at the firm level to follow in succeeding chapters. Just as the facets and geometry of a crystal reflect the microstructure, chemistry and physics of its constituent atoms and molecules, we believe that the competitive structure dynamics of an industry reflect underlying product and process technologies and innovations. Unlike a crystal the shapes taken by technological change or by industry structure are not necessarily predetermined as a superficial reading of our argument would suggest. Rather we contend only that choices made at one level are necessarily reflected at the other. For instance, greater degrees of competition will result in more rapid rates of technological change, while rapidly advancing technology and potentials for broadening application will attract entrants.In earlier work Abernathy and Utterback introduced the concept of a dominant product design and suggested that the occurrence of a dominant design may alter the character of innovation and competition in a firm and In this article we intend to explore the questions above by looking opportunistically at a series of examples arrayed over the past century. These 3 include typewriters, the automobile, television sets and picture tubes, transistors, integrated circuits, calculators and supercomputers. Data on industry participation and parallel data on technological change over the full course of an industry's development have been difficult to obtain. Thus, although our sample is not balanced or weighted in any scientific sense, it consists of the most complete sets of data that we have so far been able to discover or synthesize. More fragmentary data from other industries will be used to illustrate particular points. The data available do convincingly point to the fact that a dominant design and product standardization mark a watershed in industry structure and competition in each case examined. In all but the first case (typewriters) and the last (massively parallel computers) information on product technology and industry participation have been derived from independent sources. To date our investigations have been limited to...

Some product firms increasingly rely on service revenues as part of their business models. One possible explanation is that they turn to services to generate additional profits when their product industries mature and product revenues and profits decline. We explore this assumption by examining the role of services in the financial performance of firms in the prepackaged software products industry (Standard Industrial Classification code 7372) from 1990 to 2006. We find a convex, nonlinear relationship between a product firm's fraction of total sales coming from services and its overall operating margins. As expected, firms with a very high level of product sales are most profitable, and rising services are associated with declining profitability. We find, however, that additional services start to have a positive marginal effect on the firm's overall profits when services reach a majority of a product firm's sales. We show that traditional industry maturity arguments cannot fully explain our data. It is likely that changes in both strategy and the business environment lead product firms to place more emphasis on services. This paper was accepted by Christoph Loch, R&D and product development.

This paper begins with a literature review and framework for analyzing different types of flexibility in manufacturing and how plants can implement each type in different ways. Next, we examine some of the propositions in the framework using data from 31 printed circuit-board plants in Europe, Japan, and the United States. Our findings include the following: (1) More automation is associated empirically with less flexibility, as found in other studies. (2) Non-technology factors, such as high involvement of workers in problem-solving activities, close relationships with suppliers, and flexible wage schemes, are associated with greater mix, volume, and new-product flexibility. (3) Component reusability is significantly correlated with mix and new-product flexibility. (4) Achieving high mix or new-product flexibility does not seem to involve a cost or quality penalty. (5) Mix and newproduct flexibility are mutually reinforcing and tend to be supported by similar factors.(6) Mix flexibility may reduce volume fluctuations, which may theoretically reduce the need for volume flexibility. Based on our analysis and findings, we then suggest several new strategic insights related to the management of flexibility and some potentially fruitful areas for further theoretical and empirical research.