How Industries Evolve |
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Authors: | Anita M. McGahan |
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Affiliation: | Professor, Strategy and Management Policy, Boston University School of Management |
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Abstract: | Firms can improve their performance by tailoring investments to ride industry trends rather than to fight them. This article sheds light on how. It argues that better corporate performance hinges on understanding how industries evolve and that the main frameworks currently in use (the five forces and the S-curve/product life cycle models) are incomplete for this purpose. Building on an extensive body of fieldwork and statistical research, the author identifies four basic models of industry evolution which she calls 'receptive', 'blockbuster', 'radical organic', and 'intermediating'. Each kind of evolution involves specific kinds of risks, and each carries different implications for the relevance of established capabilities and investment priorities. |
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