Zooming In or Zooming Out: Entrants' Product Portfolios in the Nascent Drone Industry
54 Pages Posted: 5 Nov 2020
Date Written: October 28, 2020
Faced with demand uncertainty in a nascent industry, entrants often consider which customer segments to serve by tailoring the usage breadth and coherence of their product portfolios. Portfolios have high or low usage breadth, which is the extent to which they target customers in many segments, and high or low coherence, which measures how much the portfolios’ products overlap in targeted customer segments. We suggest that when entrants have prior use experience in contexts that are potential users of the new product, their portfolios exhibit low usage breadth and high coherence, due to demand-oriented cognition and knowledge. The relationship is moderated by whether they are startups or diversifying entrants and their business model at entry. The empirical context is the U.S. commercial drone industry.
Keywords: nascent industries, pre-entry experience, user innovation, product portfolios
Suggested Citation: Suggested Citation