Surviving the Gales of Creative Destruction: The Determinants of Product Turnover

52 Pages Posted: 31 May 2005

See all articles by John M. de Figueiredo

John M. de Figueiredo

Duke University School of Law; Duke University - Fuqua School of Business; National Bureau of Economic Research (NBER); Duke Innovation & Entrepreneurship Initiative

Margaret K. Kyle

London Business School; National Bureau of Economic Research (NBER)

Date Written: May 11, 2005

Abstract

Innovative industries are often characterized by rapid product turnover. Product longevity may be driven by both a product's position within a market as well as its position within a firm's larger product portfolio. However, we have little understanding of the relative importance of these factors in determining product turnover and how they interact as an industry evolves. Although researchers have invested substantial effort in analyzing firm survival and turnover, there are far fewer studies of the determinants of product survival and turnover. We use hazard rate models and count regression models to describe the behavior of firms and their products with a new and detailed database on the laser printer industry. We show, first, that competition and market structure variables have a large impact on both speeding product exit and delaying product entry. Second, there is some evidence that firms that have maintained a high market share for a number of years keep their products on the market longer than those with lower market share. Finally, firms with high innovative capacity tend to enter markets frequently, but withdraw their products at average rates. Firms with strong brands tend to introduce few products and withdraw their products slowly. With these findings, the paper links product entry and exit decisions to the broader literature on firm strategic and product management.

Keywords: Product Exit, Product Turnover, Technology, Product Portfolio

JEL Classification: L11, L63

Suggested Citation

de Figueiredo, John M. and Kyle, Margaret K., Surviving the Gales of Creative Destruction: The Determinants of Product Turnover (May 11, 2005). Available at SSRN: https://ssrn.com/abstract=730785 or http://dx.doi.org/10.2139/ssrn.730785

John M. De Figueiredo (Contact Author)

Duke University School of Law ( email )

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Duke University - Fuqua School of Business ( email )

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Margaret K. Kyle

London Business School ( email )

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United Kingdom

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
United States

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