Summary of Utterback and Suarez Academic Paper
What is their main argument and what is their evidence? What is their explanation for what they observe?
The main argument that Utterback and Suarez present is that the competitive structure of an industry is directly linked to the development of process and product innovations, these they claim can then be used to explain a unique pattern that reflects the dynamic development of high technology industries over time. According to Utterback and Suarez Industries are born with the entry of one firm that provides a new product innovation. This firm is then claimed to obtain a temporary monopoly. However with increasing levels of demand, production and as consequence of a diversity of new product designs that originate from the initial innovation, a phase of high entry follows. Eventually it is claimed that a dominant design emerges which forces numerous firms, which are unable to adapt (innovate) and compete with those firms with superior process and product integration, to fail and exit the market. This last phase begins at the point where the number of firms in the particular industry peaks and ends when the market settles and reaching stability. At this point only a small number of firms remain, which supply rather standardized and/or very similar products. These surviving firms (which managed to innovate efficiently) are claimed to have both stable sales and steady market shares. In addition they are accompanied by a small fraction of small firms, which survive by specializing on smaller market segments of the industry.
Utterback and Suarez derive and justify these findings from empirical observation of the development of several industries during the 20th century. More concretely, they focus on firms/industries dedicated to producing assembled products predominantly in the USA (and Japan), among these industries they study typewriters, automobiles, television sets and picture tubes, transistors, integrated circuits, calculators and supercomputers. Concerning
The main argument that Utterback and Suarez present is that the competitive structure of an industry is directly linked to the development of process and product innovations, these they claim can then be used to explain a unique pattern that reflects the dynamic development of high technology industries over time. According to Utterback and Suarez Industries are born with the entry of one firm that provides a new product innovation. This firm is then claimed to obtain a temporary monopoly. However with increasing levels of demand, production and as consequence of a diversity of new product designs that originate from the initial innovation, a phase of high entry follows. Eventually it is claimed that a dominant design emerges which forces numerous firms, which are unable to adapt (innovate) and compete with those firms with superior process and product integration, to fail and exit the market. This last phase begins at the point where the number of firms in the particular industry peaks and ends when the market settles and reaching stability. At this point only a small number of firms remain, which supply rather standardized and/or very similar products. These surviving firms (which managed to innovate efficiently) are claimed to have both stable sales and steady market shares. In addition they are accompanied by a small fraction of small firms, which survive by specializing on smaller market segments of the industry.
Utterback and Suarez derive and justify these findings from empirical observation of the development of several industries during the 20th century. More concretely, they focus on firms/industries dedicated to producing assembled products predominantly in the USA (and Japan), among these industries they study typewriters, automobiles, television sets and picture tubes, transistors, integrated circuits, calculators and supercomputers. Concerning