Center for Business and Government, John F. Kennedy School of Government
A growing body of research in strategic management and related public policy fields concludes that the 1980s and 1990s saw greater dynamic competition in technology-intensive ("TI") industries, with increasing industry and business performance instability as principal consequences. The authors test for evidence of the consequences of dynamic competition using a sample of 2,309 US businesses from 1978-1997 operating in 31 industries with high average R&D expenditure-to-sales ratios. Contrary to the dynamic competition argument, they observe neither sustained change in the dynamism of TI industries, nor changes in the operating performance stability of businesses in TI industries. Overall industry dynamism and intra-industry operating performance instability during this period are not significantly greater in TI industries compared to non-TI industries. These results suggest that the conclusion of increasing dynamic competition in TI industries is premature. Competitive environments for businesses in TI-industries were apparently no more dynamic in the late 1990s than they were in the late 1970s.
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