The Reference Wars: Encyclopædia Britannica's Decline and Encarta's Emergence

40 Pages Posted: 6 Apr 2016 Last revised: 29 Apr 2016

See all articles by Shane M. Greenstein

Shane M. Greenstein

Harvard University - Technology & Operations Management Unit; National Bureau of Economic Research (NBER)

Date Written: April 4, 2016

Abstract

The experience of Encyclopaedia Britannica provides the canonical example of the decline of an established firm at the outset of the digital age. Competition from Microsoft’s Encarta in 1993 led to sharp declines in the sales of books, which led to the distressed sale of the firm in 1996. This essay offers new source material about the actions at both Encarta and Britannica, and it offers a novel interpretation of events. Britannica’s management did not misperceive the opportunities and threats, and Britannica did not lack technical prowess. This narrative stresses that Britannica’s management faced organizational diseconomies of scope between supporting lines of business in the old and new markets, which generated internal conflicts. These conflicts hindered the commercialization of new technology and hastened its decline.

Keywords: Digital, diseconomies, encyclopedias, CD-ROM, Britannica

Suggested Citation

Greenstein, Shane M., The Reference Wars: Encyclopædia Britannica's Decline and Encarta's Emergence (April 4, 2016). Available at SSRN: https://ssrn.com/abstract=2758876 or http://dx.doi.org/10.2139/ssrn.2758876

Shane M. Greenstein (Contact Author)

Harvard University - Technology & Operations Management Unit ( email )

Boston, MA 02163
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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