Dominant Categories, Industry Life Cycles and Entry Timing Advantages

Trustees Of Boston University, Boston

Investigators

Abstract

This study blends established theories of industry life cycles and first-mover advantages with recent sociological research on categorization to yield a novel way of understanding some of the key dynamics of early industries. The research team will explore how the creation of categories and labels affect the emergence of a new industry and the performance of its players. The researchers anticipate that the emergence of a "dominant category" in the market space can have profound implications on the entry timing and positioning strategies of participating firms. They will look at the performance implications of firms' choices of categories and positioning for their products: e.g., type and number of categories used; consistency in their use across products; consistency between categorization and products? technical features. The research program combines the development of new theoretical models with a careful empirical research design. Using primary and secondary data from the "smartphone" market space, this interdisciplinary research team will test a number of hypotheses about the relationship between category formation, timing of entry, and firm performance. Having emerged in the last decade or so, smartphones represent a large and fast-growing market space with high variance in the number and kinds of labels used to describe product and feature offerings. This study will develop a fine-grained analysis of industry evolution that should eventually help firms make more nuanced strategic decisions regarding when and how to enter a particular industry. It should also have implications for policy makers seeking to understand how to meaningfully influence the development paths of new industries.