Detecting the relationship between competitive intensity and firm product line length: Evidence from the worldwide mobile phone industry

Giachetti, Claudio; Dagnino, Giovanni Battista

doi:10.1002/smj.2154

Cited by 45 publications

(33 citation statements)

References 44 publications

(83 reference statements)

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“…Because EMI exited the industry at the end of 2011, we tally 9,061 major‐style‐year combinations, which constitute observations in our preliminary sample. Our choice of yearly spells agrees with previous research on product strategies in differentiated‐product markets (Giachetti & Dagnino, ).…”

Section: Methodsmentioning

confidence: 99%

Product proliferation, complexity, and deterrence to imitation in differentiated‐product oligopolies

Piazzai

Wijnberg

2019

Strategic Management Journal

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Research Summary Game theory suggests that, in oligopolistic markets characterized by nonprice competition, dominant incumbents can use product proliferation to occupy a region of the product space (i.e., a subspace) and deter rivals from imitating their products. In part, this is because product proliferation makes the introduction of close substitutes comparatively less profitable; in part, it is because the strategy conveys a threat of retaliation to potential imitators. Yet this threat is only credible if the proliferator has high costs of exit from the occupied region of space. We hypothesize that complexity, as a property of product (sub)spaces, generates exit costs for the proliferator and increases the deterrent power of its strategy. We test this hypothesis by studying sequential product introductions in the U.S. recording industry, 2004–2014. Managerial Summary Differentiated‐product markets are often concentrated in the hands of a few dominant organizations, which strive to keep on equal footing by offering similar products. In these markets, a product proliferation strategy can help one of the dominant incumbents claim a particular submarket as its territory. Investing heavily in that submarket communicates a threat that the proliferator will retaliate against invaders to protect these investments. However, this threat is not credible enough to deter rivals unless the occupied submarket is sufficiently complex in terms of product attributes, as precisely this kind of complexity makes it harder for proliferators to back down if challenged. We find evidence of this mechanism in an analysis of product competition among major record companies and discuss implications for strategic decision‐making. RESOURCES This article has earned an Open Data badge for making publicly available the digitally‐shareable data necessary to reproduce the reported results. The data is available at https://github.com/piazzai/smj-18-19552. Learn more about the Open Practices badges from the Center for Open Science: https://osf.io/tvyxz/wiki.

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Section: Methodsmentioning

confidence: 99%

Product proliferation, complexity, and deterrence to imitation in differentiated‐product oligopolies

Piazzai

Wijnberg

2019

Strategic Management Journal

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“…At the firm-level, we used the following controls: Firm sales performance, measured with the natural logarithm of the number of units sold in the UK market on a yearly basis. Product line length, measured with the natural logarithm of the number of handset models in the firm's portfolio at time t (Giachetti and Dagnino, 2014). Product line length dissimilarity (Lanzolla and Suárez, 2012), measured with the absolute value of the difference (i.e., the Euclidean distance) between the firm's product line length and the pioneer's product line length.…”

Section: Control Variablesmentioning

confidence: 99%

Product Technology Imitation Over the Product Diffusion Cycle: Which Companies and Product Innovations do Competitors Imitate More Quickly?

Giachetti¹,

Lanzolla²

2016

Long Range Planning

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We contribute to the imitation literature by shedding light on product imitation dynamics over the market evolution, a hithertooverlooked level of analysis. First, we introduce product diffusion within a more integrative theory of product imitation. Second, we investigate the time to imitation of a new product technology: our baseline hypothesis is that the time to imitation decreases as the product diffusion in the market increases. Third, we extend our prediction by differentiating by the type of innovator-i.e., the market leader and a member of the same strategic group-and by the type of product technology-i.e., functionality-defining technologies and substitute technologies. We hypothesize that, over the product diffusion cycle, product technologies launched by market leaders are copied more quickly than ones launched by non-market leader firms; product technologies launched by members of a focal firm's own strategic group are copied more quickly than ones launched by outsiders; and substitute technologies are copied more quickly than functionality-defining technologies. We test our hypotheses in the context of the UK mobile phone industry, by exploiting a unique database on twenty-two product innovations introduced by thirteen mobile handset manufacturers between 1997 and 2008. The model estimations provide support for most of our hypotheses.

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“…We measured the propensity of the firm to follow the market leader product portfolio strategy by computing the difference between the level of technological convergence in the firm i product portfolio ( TC i ) and the level of technological convergence in the market leader j product portfolio ( TC j ). The level of technological convergence in a firm product portfolio is measured by the average number of convergent technologies in the products introduced by the firm in year t (Giachetti and Dagnino, ):

T C_{i, t} = \frac{\sum_{p = 1}^{m} n_{p, t}}{m}

where n is the number of convergent technologies incorporated in the handset model p (in our setting n can range from 0 to 10), introduced in the market at time t by firm i , and m is the number of handset models introduced by the firm at time t .…”

Section: Methodsmentioning

confidence: 99%

The impact of technological convergence on firms' product portfolio strategy: an information‐based imitation approach

Giachetti

Dagnino

2015

R & D Management

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Technological convergence in the electronics industry has enabled disparate new functionalities to be added to existing basic products. Although the main drivers of technological convergence have been examined by the technological change literature, the impact of technological convergence on firms' product portfolio strategies remains a largely unexplored issue. Drawing on the technological change and information-based imitation literatures, we develop hypotheses on how the introduction in the market of technologies from other product categories affects the way firms modify their product portfolio vis-à-vis the market leader. Data on nearly 300 imitation strategies at the product portfolio level, which cover over 3,500 handset models introduced by 55 mobile phone vendors from 1994 to 2010, show that the relationship between the level of technological convergence in a product category and the firms' level of imitation of the market leader product portfolio strategy is U-shaped. Data also show that the firm's prior experience plays an important role in moderating this curvilinear relationship.'Pundits have long predicted an era of so-called convergence, a cosmic collision of the computer, consumer-electronics, and telecom industries. Now, at last, that epoch is arriving [. . .] convergence brings new opportunities, and big risks'

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Detecting the relationship between competitive intensity and firm product line length: Evidence from the worldwide mobile phone industry

Cited by 45 publications

References 44 publications

Product proliferation, complexity, and deterrence to imitation in differentiated‐product oligopolies

Product proliferation, complexity, and deterrence to imitation in differentiated‐product oligopolies

Product Technology Imitation Over the Product Diffusion Cycle: Which Companies and Product Innovations do Competitors Imitate More Quickly?

The impact of technological convergence on firms' product portfolio strategy: an information‐based imitation approach

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