Environmental Influences Upon Firm Entry into New Sub-Markets: Evidence from the Worldwide Hard Disk Drive Industry

Abstract

Firms need to access skills, capital, and customers to enter into an industry initially, and the choices they make to access these resources are likely to exert path dependent influences over subsequent entry behavior into new submarkets. This paper explores how firms configure themselves to access skills, capital and customers, and reports data on their association with whether and when firms enter new sub-markets in the worldwide hard disk drive industry. While, as with other studies, there appear to be geographic differences between US and Japanese firms in sub-market entry behavior, these are shown not to simply reflect differences in region: US startup firms with former IBM personnel, and Japanese incumbent firms with keiretsu linkages to their customers, exhibit different entry behavior than other firms in the same region. The analysis suggests that entry decisions are influenced by firms' configuration choices to access needed resources, and that the menu of configuration options available to firm managers varies across different institutional settings.

Keywords: Sub-market entry, disruption, comparative, US-Japan

JEL Classification: B52, O32, O31, O33