Incumbent Entry into New Market Niches: The Role of Experience and Managerial Choice in the Creation of Dynamic Capabilities

By Andrew A. King, Christopher L. Tucci. Management Sciences, 2002

661 citations recorded by the source corpus.

Increasingly, technological innovation creates markets for new products and services. To survive, firms must respond to these new markets. How do firms develop the capabilities necessary to succeed in such changing conditions? Some suggest that experience with previous entry builds such capabilities. Others suggest that capabilities arise from experience producing and selling to existing markets. The role of managers is also debated. Some argue that experience with existing markets causes managers to miss entry opportunities. Others argue that managers enter new markets when their firm possesses the experience needed to compete effectively. In this paper, we explore these issues by investigating entry patterns in the disk-drive industry. We investigate the effect of experience in existing markets and experience with previous market entry. We find that experience in previous markets increased the probability that a firm would enter a new market. We show that this experience had greater value if the firm entered the new market. We infer that managers chose to enter these markets to obtain this increase in value.

Subfields: Economics and Econometrics, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/af6afd7837089d51df298292cb1cef34fbeaeef0

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Citations in the corpus

The birth of capabilities: market entry and the importance of pre-history (2002, background): “In a study of new product generations in the US disk drive industry, King and Tucci (2001) observed that entrants with greater production and sales experience in prior generations attained larger sales. Similarly, in the US television receiver industry, Klepper and Simons (2000) found that diversify”
Cognition and Capabilities: A Multi-Level Perspective (2013, background): “A few studies (exemplified by King & Tucci, 2002) highlight that the managerial choice of a strategy moderates the link between capabilities and performance, but in the majority of studies managerial choice is not explicitly modeled or measured.”
Cognition and Renewal: Comparing CEO and Organizational Effects on Incumbent Adaptation to Technical Change (2009, background): “The presumption is that managers choose to pursue new opportunities when their firms have the proper capabilities to succeed in the new market ( King and Tucci 2002, Klepper and Simons 2000, Lambkin 1988), and that their decision-making process is a relatively straightforward economic calculation.”
A Capabilities Perspective on the Effects of Early Internationalization on Firm Survival and Growth (2006, background): “Although the dynamic capabilities literature has focused on organizational experience and capability development, only in limited research have scholars explored managers’ experience and the formation of organizational capabilities (King & Tucci, 2002).”
Effects of Search Timing on Innovation: The Value of Not Being in Sync with Rivals (2008, background): “It represents the commercial potential of the firm’s research and development (R&D) activities (King and Tucci, 2002; Katila and Shane, 2005) and is thus a source of competitive advantage and profits (Utterback, 1994).”
The Architecture of Dynamic Capability Research Identifying the Building Blocks of a Configurational Approach (2016, neutral): “…to strategic decisions, structures and systems Kim (2010) Conceptual Literature review Application of property rights theory to dynamic capabilities King & Tucci (2002) Quantitative Random-effects logistic regression Analysis of organizational structures and their reconfiguration using a dynamic…”
A Behavioral Theory of the Firm - 40 Years and Counting: Introduction and Impact (2007, background): “Second, firm capabilities grow as a function of (relevant) experience in a way that suggests gradual fine-tuning of routines (Levinthal and Myatt 1994, King and Tucci 2002, Zollo et al. 2002).”
Technological Discontinuities and Complementary Assets: A Longitudinal Study of Industry and Firm Performance (2005, methodology): “We employ a longitudinal, multiindustry, multilevel, quantitative approach, whereas most prior studies in this line of research are singleindustry studies ( King and Tucci 2002; Mitchell 1989; Rothaermel 2001a, b; Tripsas 1997) that often rely exclusively on qualitative case histories (Abernathy an”
KNOWLEDGE TRANSFER THROUGH INHERITANCE: SPIN- OUT GENERATION, DEVELOPMENT, AND SURVIVAL (2004, methodology): “As have a number of past researchers (Christensen, 1993; King & Tucci, 2002; Lerner, 1997), we used information compiled from the Disk/Trend Report, a market research publication that has covered the disk drive industry since 1977.”
Dynamic Capabilities: A Review of Past Research and an Agenda for the Future (2010, background): “King and Tucci (2002), for instance, used experience measures, which are likely to be of interest in future attempts to assess some of the propensities included in the dynamic capability construct.”