Dominant Designs and the Survival of Firms

Dominant Designs and the Survival of Firms

April 1991, Revised July 1992 | Fernando F. Suárez, James M. Utterback
This paper explores the relationship between technological evolution, dominant designs, and firm survival. The authors argue that the survival of firms is significantly influenced by the emergence of a dominant design, which shifts the competitive environment and affects entry timing and financial strength. They hypothesize that firms entering an industry before the emergence of a dominant design have a higher probability of survival compared to those entering after. The study uses survival analysis to examine data from six industries: automobile, typewriter, transistor, electronic calculator, television, and picture tube. The results support the hypothesis, showing that firms entering before the dominant design have significantly lower failure rates. The authors also discuss the implications of their findings for understanding firm survival and suggest future research directions, including more rigorous definitions of dominant designs and broader industry samples.This paper explores the relationship between technological evolution, dominant designs, and firm survival. The authors argue that the survival of firms is significantly influenced by the emergence of a dominant design, which shifts the competitive environment and affects entry timing and financial strength. They hypothesize that firms entering an industry before the emergence of a dominant design have a higher probability of survival compared to those entering after. The study uses survival analysis to examine data from six industries: automobile, typewriter, transistor, electronic calculator, television, and picture tube. The results support the hypothesis, showing that firms entering before the dominant design have significantly lower failure rates. The authors also discuss the implications of their findings for understanding firm survival and suggest future research directions, including more rigorous definitions of dominant designs and broader industry samples.
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