Information Storage Industry Center

Various industries are marked by rapid technological change and increasingly global competition. We explain how such developments provide a context for "Red Queen" competition, where organizational learning and competition accelerate each other over time. Arguing that competition stimulates organizational development, we predict that organizations experiencing a history of competition are less likely to fail. This implies that a strategy of technological differentiation generates short-run survival advantages, but backfires over time as isolated organizations suffer from increasing rates of failure. Also, we argue that the Red Queen magnifies differences in competitiveness among organizations due to underlying differences in their propensities to learn, so that technologically leading organizations are especially strong competitors. This strength, paradoxically, makes technological leadership a hazardous strategy because technological leaders must compete against stronger rivals. We find support for these conjectures in a study of the worldwide hard disk drive market, estimating organizational ecology models that allow for increasing global competition over time and that help to explain national differences in organizational survival rates.