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EFFECTS OF ENTRY MODE AND INCUMBENCY STATUS ON THE RATES OF FIRM PRODUCT INNOVATION IN THE WORLDWIDE OPTICAL DISK DRIVE INDUSTRY, 1983-1999

  • Author(s): Olga M. Khessina
  • et al.
Abstract

Firms entering an industry de novo (start-up) and firms entering de alio (diversification away from another industry) differ in the initial entry conditions. In this paper I propose that the differences in resource endowment, previous experience, and structural flexibility between de novo and de alio firms at the time of entry have long-lasting imprinting effects on their innovation behavior. In particular, I predict that de novo firms exert greater efforts and achieve greater technological outcomes in product innovation than de alio firms. Furthermore, I argue that firm entry mode explains additional variance in firm innovative behavior, which is not explained by entrant-incumbent status alone. I find strong empirical support for these predictions when analyzing product innovation of all firms that ever participated in the worldwide optical disk drive industry, 1983-1999. I discuss the implications of my findings for the entrant-incumbent research in the literature of the management of innovation.

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