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"Are Technology-Intensive Industries More Dynamically Competitive? No and Yes"

Paul M. Vaaler and Gerry McNamara

 

First Author :

Paul M. Vaaler
Business Administration
University of Illinois at Urbana-Champaign, College of Business
1206 S. Sixth Street
350 Wohlers Hall, MC 706
Champaign, IL 61820
USA

217-333-4504
217-244-7969 (Fax)

pvaaler@uiuc.edu

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Second Author :

Gerry McNamara
Management
The Michigan State University, Broad School of Management
439 N. Business Complex
N475 North Business Complex
East Lansing, MI 48824
USA

517-432-5527
517-432-1111 (Fax)

mcnamara@bus.msu.edu

 
 
Abstract :
 
A growing body of research in management and related public policy fields concludes that the 1980s and 1990s saw greater dynamic competition throughout technology-intensive (“TI”) industries, with wide-spread, steady increase in TI industry and business performance instability as principal consequences. We test for evidence of these consequences in a large sample of US businesses operating from 1978-1997 in 31 industries with high average R&D expenditure-to-sales ratios. In the full sample, we find no evidence of sustained increase in TI industry and business performance instability, nor any evidence of significant cross-sectional differences in performance instability between TI and non-TI industry businesses over these 20 years. For a small segment of very high-performing businesses from TI industries, however, we do uncover evidence of both significantly declining performance stability as well as evidence of significant cross-sectional differences in performance stability compared to similarly high-performing businesses from non-TI industries over 20 years. We conclude that assumptions of wide-spread, long-term increase in dynamic competition lack robust evidentiary support. It is premature to embrace and apply broadly new theoretical perspectives, management practices and public policies to TI industry competitive dynamics that may be little changed since the late 1970s. Yet, we find evidence of increasing dynamic competition within the strict boundary conditions of very high-performing TI industry businesses. Careful application of new perspectives, practices and policies within these boundary conditions may contribute significantly and substantially to explanations of business behavior and performance in TI industries.
 
 
Keywords :
 
dynamic competition, technology-intensive industries
 
 
Footnotes & Acknowledgements :
 
Please contact Paul M. Vaaler regarding this paper. We thank Charles Hadlock for help in collecting the data used in this study. Earlier versions of this paper benefited from comments, criticisms and suggestions by Richard D’Aveni, Steven Block, Donald Gonson, Anita McGahan, Iain Cockburn, Timothy Ruefli, Joel Trachtman and Robert Wiggins, and from presentation at the National Bureau of Economic Research Productivity Seminar, at the Tuck School (Organization Science Fall Conference), and at the Academy of Management Annual Meetings. All remaining errors are ours.
 
 
Manuscript Received : 2006
Manuscript Published : December 22, 2006
 
 
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