Assistant Professor of Strategy
Journal Article | Strategic Management Journal | 39 | January 2018
Capabilities, Technologies, and Firm Exit During Industry Shakeout: Evidence from the Global Solar Photovoltaic Industry
Research Abstract Explanations of entrants' survival in an emerging industry are premised on pre-entry capabilities or technology entry choices prior to the emergence of the dominant design. the authors consider how these drivers interact to strengthen or nullify firms' pre-entry advantage, and facilitate adaptation as the industry evolves. They also expand the treatment of exit by separating dissolution from acquisition, in which firms' capabilities continue to be utilized in the industry. Studying a recent shakeout in the global solar photovoltaic industry, the authors find that pre-entry capabilities and technology choices act in a complementary manner for some firms, thereby enhancing survival, and as buffers against exit for others. Nearly half of exits were via acquisitions, and technology choice at entry played an important role in determining how firms exited.Managerial Abstract New industries are often characterized by intense technology competition that culminates in a dominant technology followed by industry shakeout. Although prior research underscores the central role of technology choice and firm capabilities to survival, we do not actually know how firms with different capabilities and who have made competing technology choices, survive an industry shakeout. In this paper, the authors show how entrants capabilities and technology choices can act in a complementary manner for some firms, enhancing their chance of survival, and as buffers against failure for others. Moreover, we explain why some firms that do exit are acquired, when others are dissolved.