- 11 Aug 2010
- Working Paper Summaries
The Influence of Prior Industry Affiliation on Framing in Nascent Industries: The Evolution of Digital Cameras
Executive Summary — Firms entering a new product market face tremendous ambiguity and competitive uncertainty, particularly when the new market is sparked by radical technological change. Potential customers have little or no experience with products, and during this period of turbulence, firms experiment with alternative product configurations, functions, and technologies. By studying the emergence of the consumer mass market for digital cameras, Carlson School of Management professor Mary J. Benner and HBS professor Mary Tripsas explore what factors influence a firm's initial introduction of product features during the nascent stage of a product market, and how the process of convergence on a standard set of features unfolds. In particular, they assess how a firm's prior industry affiliation influences its conceptualization of the product. Key concepts include:
- The authors used a dataset that includes the entry date and features of almost every camera in the history of the U.S. consumer digital camera industry from its inception in 1991 through 2006.
- Results suggest that firms from the same prior industry shared similar beliefs about what features (such as optical zoom) would be valued, as reflected in their concurrent introduction of features.
- Firms were likely to imitate the behavior of firms from the same prior industry, as opposed to that of firms from different prior industries, in introducing some but not all features.
- Finally, as a firm's experience with a particular feature increased, the influence of prior industry decreased.
New industries sparked by technological change are characterized by high uncertainty. In this paper we explore how a firm's conceptualization of products in this context, as reflected by product feature choices, is influenced by prior industry affiliation. We study digital cameras introduced from 1991 to 2006 by firms from three prior industries. We hypothesize and find first, that prior industry experience shapes a set of shared beliefs resulting in similar and concurrent firm behavior; second, that firms notice and imitate the behaviors of firms from the same prior industry; and third, that as firms gain experience with particular features, the influence of prior industry decreases. This study extends previous research on firm entry into new domains by examining heterogeneity in firms' framing and feature-level entry choices.