Information Storage Industry Center

Olga M. Khessina
Haas School of Business
University of California at Berkeley Berkeley, CA 94720
khessina@haas.berkeley.edu

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Report 2002-01  October, 2002

Effects of Entry Mode and Incumbency Status on the Rates of Firm Product Innovation in the Worldwide Optical Disk Drive Industry, 1983-1999*

Olga M. Khessina

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 novoand de aliofirms at the time of entry have long-lasting imprinting effects on their innovation behavior. In particular, I predict thatde novofirms exert greater efforts and achieve greater technological outcomes in product innovation thande aliofirms. 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. Click here to download the paper (PDF format)

* This paper is a part of my dissertation. I would like to thank Glenn Carroll for his guidance on this research. I also appreciate the helpful feedback from the members of my oral and dissertation committees: Glenn Carroll, Neil Fligstein, John Freeman, Paul Gertler, Bronwyn Hall, David Mowery and Trond Petersen. I appreciate discussions with Jonathan Jaffee. I benefited from presenting the earlier versions of this paper at the Research Seminar in Business and Public Policy, Colloquium in Organizational Behavior and Industrial Relations, and the Innovation Seminar at the Haas School of Business, U.C. Berkeley and at the 2002 CCC Doctoral Consortium, Boston University. The study described in this paper is a part of the research project directed by Glenn Carroll and David McKendrick, under the auspices of the Information Storage Industry Center, U.C. San Diego, funded by the Alfred P. Sloan Foundation.