Adapting Key to Survival for First-Mover Firms

Professor Anand Swaminathan and his co-author Professor Glen Dowell of the Mendoza College of Business at the University of Notre Dame have examined how the timing of a firm’s entry into an industry affects its chances of adopting the dominant technological design and the consequent effect on its survival. In their recent study, “Entry Timing, Exploration, and Firm Survival in the Early U.S. Bicycle Industry,” published in the April 2006 issue of the Strategic Management Journal, Swaminathan and Dowell found that in the context of the nation’s bike sector, firms that enter an industry earlier are less likely to make a transition to the product generation that becomes the dominant design. Much of this, according to the authors is due to organizational inertia and an inability to change as trends evolve. Swaminathan and Dowell argue that exploration through the introduction of new products appears to reflect a local search process and works to hinder a firm’s transition to the dominant design. They also found that, though firms entering the industry early may exhibit longer life spans, their survival advantage is restricted to the period before the dominant design emerges.

In another recently published paper, Swaminathan and his co-authors Professor Glenn Hoetker of the University of Illinois at Urbana-Champaign and Professor Will Mitchell of Duke University studied the contingent effect of modularity in components on the survival of suppliers in the U.S. automobile industry from 1918 to 1942. In their paper, “Modularity and the Impact of Buyer-Supplier Relationships on Supplier Survival,” published in the February 2007 issue of Management Science, Swaminathan and his co-authors found that suppliers of high-modularity car parts benefit more from autonomy provided by potential customers, while suppliers of low-modularity components benefit more from ties to high-status customers. All suppliers benefited from higher independence in their relationships with existing customers. Their findings suggest that the impact of buyer-supplier ties on supplier performance is contingent on the modularity of component design.