The Industry Life Cycle in an Economic Downturn: Lessons from Firm’s Behavior in Spain, 2007–2012

Abstract

This paper presents the main results of the application of the Industry Life Cycle model in the study of stagnant and declining businesses. The main purpose was to prove its validity to assess the competitive environment, in a context of economic turmoil as the one of the 2007-2008 economic downturn. The comparison of macro and micro data at a national level, with managerial declaration of behavior of a sample of firms with declining demands, revealed that there was a mismatch on the interpretation of the environment and strategic conduct and this impacted in the overall performance of the industry. Our findings stress the need for a dialogue between researchers and practitioners, in order to provide better advice and directions to adapt to unfavorable circumstances, because of the long-lasting effects of downturn and the current COVID-19 crisis.