Dominant designs, innovation shocks, and the follower's dilemma
Article first published online: 21 NOV 2013
Copyright © 2013 John Wiley & Sons, Ltd.
Strategic Management Journal
How to Cite
Argyres, N., Bigelow, L. and Nickerson, J. A. (2013), Dominant designs, innovation shocks, and the follower's dilemma. Strat. Mgmt. J.. doi: 10.1002/smj.2207
- Article first published online: 21 NOV 2013
- Accepted manuscript online: 24 OCT 2013 11:11AM EST
- Manuscript Accepted: 21 OCT 2013
- Manuscript Revised: 18 OCT 2013
- Manuscript Received: 13 JUN 2011
- dominant design;
- industry evolution;
- strategic positioning;
- industry shakeout
A dominant design is thought to usher in a period of intense competition based on cost, causing an often-fierce industry shakeout. We aim to challenge the foundations of the dominant design literature, and develop new insights about the evolution of competition. We argue that strategic repositioning and elevated exit rates are often observed long before the emergence of a dominant design, and that a key cause is the introduction of a particular product for which demand is unexpectedly high (an “innovation shock”). This introduction creates a dilemma for followers, which we suggest is resolved based on followers' comparative adjustment costs. We test implications of these ideas on data from the early U.S. auto industry, treating Ford's Model T as the innovation shock. Copyright © 2013 John Wiley & Sons, Ltd.