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 fir 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 fir competitive advantages.This work shows that innovation and product differentiation, along with investments in co-specialised assets, are variables strongly correlated to young fir probability to survive and grow. In doing so, we have collected highly detailed information on product introduction, US patents granted, worldwide alliances and biographical data of fir founders.
Previous literature on open source software (OSS) mostly analyzes organizational issues within communities of developers and users. This paper focuses on for-profit organizations that release software products under OSS licenses, and argues that variations in their endowments of intellectual property rights, namely patents and trademarks, help to determine which firms will tend to incorporate OSS into commercial products. We explain whether and under what conditions preexisting stocks of intellectual property rights can be useful complementary assets that allow firms to benefit directly or indirectly from commercializing OSS products, and test our hypotheses on a novel data set built on firms' announcements of OSS product releases in the specialized press between 1995 and 2003. We find three robust results: (a) firms with large stocks of software patents are more likely to release OSS products; (b) firms with large stocks of software trademarks are less likely to release OSS products; (c) firms with large stocks of hardware trademarks are more likely to release OSS products.
W e investigate the impact of rivals' product innovation and new advertising on a firm's financial market value in mature product markets. Our test bed is the carbonated soft drink market between 1999 and 2003, a period characterized by a near duopoly between Coca-Cola and Pespi. Empirically, we focus on new product announcements as a proxy of product innovation and on filed trademarks as a measure of new advertising. We find that rival product announcements decrease a firm's financial market value, and that rival filed trademarks increase it. Finally, we find that the effect of new advertising is channeled through market size dynamics, while that of product innovation operates through market share dynamics. Results are robust across different estimation techniques (event study, Tobin's q) and model specifications.
This paper seeks to explore the drivers of survival in environments characterized by high rates of entry and exit, fragmented market shares, rapid pace of product innovation and proliferation of young ventures. The paper aims to underscore the role played by postentry product strategies, along with their interaction, after carefully controlling for 'at entry' factors and demographic conditions. Based on a population of 270 firms that entered the US security software industry between 1989 and 1998, we find evidence that surviving entities are those that are more aggressive in the adoption of versioning and portfolio broadening strategies. In particular, focusing on any one of these two strategies leads to a higher probability of survival as opposed to adopting a mixed strategy.
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