Firm Strategy and Age Dependence: A Contingent View of the Liabilities of Newness, Adolescence, and Obsolescence

Abstract

Unlike prior research on organizational age dependence, which has described entire populations as exhibiting a liability of newness, adolescence, or obsolescence, this study adopts a contingent view by considering the interactive effects of age and technology strategy. Distinctions are drawn between proprietary strategists, who use internally developed, firm-specific technologies, and standards-based strategists, whose technologies conform with open and publicly available specifications. Results of a study of the firms in the U.S. personal computer industry show that technology strategy had two important influences on aging. First, age dependence varied across strategies. For example, standards-based strategists exhibited a liability of adolescence in their failure rates, while proprietary strategists exhibited a liability of obsolescence. Second, the joint effects of age and strategy produced long-term trade-offs across different performance outcomes. For instance, rates of sales growth increased with age for proprietary strategists, yet so did their risks of failure. Overall, this study suggests that multiple patterns of age dependence may simultaneously exist within a single population.