INCUMBENT SURVIVAL DURING MARKET FUSION IN MATURED INDUSTRIES: THE INFLUENCE OF COMPONENT AND ARCHITECTURAL CAPABILITIES ON THE SURVIVAL OF U.S. MACHINE TOOL MANUFACTURERS DURING 1975–1995

Abstract

We investigate the effects of technological capabilities on firms’ survival chances during market-fusing technological change. Our context is the matured U.S. machine tool industry. During the period of our study, 1975 through 1995, a drastic shift in demand conditions prompted the buyers of machine tools to demand more versatile products to improve their productivity. The advent of microprocessors enabled manufacturers to meet these demands by combining the functions of previously distinctive products. As a result, market segments fused and machine tool manufacturers in once disparate product categories came into direct competition with one another. We propose that incumbents with broader component and architectural capabilities will be better able to adapt to and hence survive market-fusing technological change. Our results, based on a panel data set of U.S. machine tool incumbents, support the value of broad component capabilities but reveal no adaptive advantage of architectural capabilities.

Citation

Roy, R. and McEvily, S.K. (2004), "INCUMBENT SURVIVAL DURING MARKET FUSION IN MATURED INDUSTRIES: THE INFLUENCE OF COMPONENT AND ARCHITECTURAL CAPABILITIES ON THE SURVIVAL OF U.S. MACHINE TOOL MANUFACTURERS DURING 1975–1995", Baum, J.A.C. and McGahan, A.M. (Ed.) Business Strategy over the Industry Lifecycle (Advances in Strategic Management, Vol. 21), Emerald Group Publishing Limited, Leeds, pp. 199-224. https://doi.org/10.1016/S0742-3322(04)21007-5