Whether and When? Probability and Timing of Incumbents' Entry into Emerging Industrial Subfields

Abstract

Many people have helped with this paper. The author would like to acknowledge explicitly the assistance of Glenn Carroll, David Teece, and the ASQ editor and reviewers. Part of this research was conducted with financial assistance from the Social Sciences and Humanities Research Council of Canada and the University of California at Berkeley. This paper examines the probability and timing of entry by industry incumbents into emerging technical subfields. When a new technical subfield of an industry emerges, an industry incumbent faces opposing entry incentives, either to wait until technical and market uncertainties subside or to stake out a strong position early. This paper argues that an incumbent is likely to enter a new subfield if the firm's core products are threatened or if it possesses industry-specialized supporting assets. The greater the competitive threat, the less likely an incumbent is to enter but the earlier it will do so. The predictions are supported with analysis of 30 years of entry data from five subfields of the American medical diagnostic imaging industry.'