Managers must choose to allocate scarce resources either to the maintenance of a range of products tailored to heterogeneous consumer preferences or to the efficient production of a small number of products. In addition, managers must choose the degree to which they periodically cull the product line. Vigorous selection removes poor performers from the product line, but this action simultaneously impairs the firm’s ability to monitor changes in consumer preferences. Empirical evidence from the computer workstation industry reveals that the ideal choice of product variety depends on the competitive ecology of the industry. Product variety becomes less valuable as the total number of products on the market increases, but it increases in value as uncertainty makes the accurate prediction of demand difficult. How many variations on a product should a company produce? Henry Ford once remarked that customers could choose his Model T in any color “so long as it was black. ” Although the color example is extreme, lack of product variety allowed Ford to take dramatic advantage of economies of scale through assembly-line production. Nevertheless, this focus also opened the door for General Motors. By providing consumers with choice, General Motors increased its market share from 10 % in the early 1920s to 45 % in 1940. Product variety can be an important strategic variable. With finite capital, the manager must allocate resources either to creating multiple products tailored to individual consumer preferences or to developing efficient processes to produce a few products (Spence, 1976; Lancaster, 1979; Moorthy, 1984). Multiple product offerings can increase sales (Perloff and Salop, 1985) and allow producers to charge higher prices (Pigou, 1920), but producing a variety of goods can also increase production costs,

Data on Silicon Valley law firms over a 50-year period were used to study the genealogy of organizational populations and its consequences for organizational life chances when a member of an existing firm leaves to found a new firm. Hypotheses and subsequent analysis suggest that the transfer of resources and routines between a parent organization and its progeny decreases life chances for the parent firm and increases life chances for the progeny. The results are contingent on the founder’s previous position in the parent firm and time since the parenting event. Moreover, I find that progeny have lower life chances when the parent is a failing firm, when there are multiple parents, and when the founder is a former senior partner of a large law firm. • 1 Organizational sociologists have long considered the effects of the transfer of resources and routines from old to new organizations. The 1980s featured a relatively brief but active line of research that attempted to establish a framework for understanding new organizations as the progeny of parent organizations. Brittain and Freeman (1980) examined factors that lead organizational members to leave and start new organizations. Other scholars, such as McKelvey

All authors contributed equally. The names are arranged in alphabetical order

Despite much research, debate continues about the impact of risk taking on a firm’s future performance. Unlike prior studies, we propose that risk-return relationships evolve as firms age and learn, particularly in high-velocity settings where accumulated knowledge affects how firms respond to technological change. Discerning this requires three things absent from prior analyses: (1) studying an entire population; (2) modeling evolutionary processes; and (3) using separate models to capture how a firm’s gains and losses (i.e., its strong and weak performances) unfold across time. Using this framework, we found that (a) risk-return relationships generally evolved from positive to negative as firms aged; because (b) firms learned to avoid large losses at younger ages than they learned to sustain large gains; yet (c) the risk taking that followed below-aspiration performance moderated those effects such that major setbacks prompted large future gains and large future losses among older firms and downward spirals among younger ones. 1 Relationships between risk and return are central to our lives. In the hope of emotional or monetary rewards, some people take risks by climbing mountains, changing employers, or switching careers. Some executives take risks in pursuit of better pay and enhanced reputations, and some firms pursue risky strategies in a quest for higher sales and profits.

Generalists, polymorphists and specialists in the UK

The study described in this chapter 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, 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 management of innovation literature.

Although many theories predict strong effects of organizational position on a variety of outcomes, studies that examine the propensity of firms to collectively change positions on the market are rare. We borrow ideas from theories that examine the precursors of organizational change but find that these predictions are often contradictory. Studies of inertia vs. exploration and of imitation vs. strategic differentiation and resource competition offer conflicting predictions. We reconcile the opposing arguments and develop a theory of collective change in strategic position by integrating ideas from established learning, institutional, ecological, and management theories. The core of our theory blends structural and cognitive processes and posits that the properties of the firms ’ external context interact with managerial perceptions of the resource space in which their firms operate. Interpretations of resource availability, competitive forces and collective identities clash as managers try to interpret their firm’s position through the behavior of their peers, as if reflecting in a looking glass. Empirical analyses of changes in strategic position among U.S. automanufacturers support our theory and lay out a framework for further integration among cognitive and structural perspectives. Most sociological and management theories consider market position a primary

Nickerson, and Oliver Williamson for providing critical comments on earlier drafts of

In this paper we developed a concept suggesting that initial entry conditions experienced by start-ups and diversified firms affect the behavior and fates of their products. Specifically, we predicted that in capital intensive industries, initial entry conditions confer advantages to diversifiers from related industries. As a result, these firms are likely to ship more models of products than start-ups. Products made by diversifiers are likely to have a longer market life span and exert a stronger competitive pressure than those made by start-ups. We tested these predictions on all products ever shipped in the worldwide optical disk drive industry, 1983-1999. The statistical analysis largely supported our theoretical predictions.

[Submitted for second round review to Academy of Management Review] The role of environmental dynamics