Entry plays a central role in nearly all industry economistsÕ models of industrial competition. E... more Entry plays a central role in nearly all industry economistsÕ models of industrial competition. Equilibrium is assumed to be brought about by a pool of potential entrants, ready to enter if incumbent firms earn excessive profits. If an unlimited pool of such potential entrants, each with capabilities comparable to incumbent firms, is assumed to exist, then in the long run economic profits are driven to zero. Where these firms come from and where they get their capabilities is not generally considered in such models; all that is important is that a sufficient number of them exist to drive economic profits to zero. This perspective stands in sharp contrast to the business strategistÕs conception of industrial competition. Strategists assume that firms are fundamentally different. They exhort firms to identify and exploit their core capabilities, which can be the source of persistent economic profits. But where do these capabilities come from? Do firms possess them when they initially enter industries? If so, then entrants will differ in the threat they pose to incumbents, and entry will no longer insure that economic profits are driven to zero over time. Indeed, the very notion of an equilibrium in which all firms earn zero economic profits would no longer be so compelling. In light of the importance of entry in models of industrial competition, it is surprising how little industry economists and strategists know about where entrants come We thank Keith Pavitt, Richard Rosenbloom, and participants in the 1999 Dartmouth Conference on the Evolution of Firm Capabilities. Klepper gratefully acknowledges support from the Economics Program of the National Science Foundation, Grant No. SBR-9600041. from and how their backgrounds affect their fates. The few studies that consider all the entrants into an industry and analyze how their backgrounds affect their market share and survival over the industryÕs evolution are not reassuring about conventional models. They suggest that firm histories do have a substantial effect on firm performance , ). Whether the effects of pre-entry experience dissipate or persist over time and exactly how the backgrounds of entrants condition their performance is less clear. Even less is known about what effect, if any, heterogeneity among entrants has on the nature of competition and the market structure of industries. This paper explores how prior experience conditions entry, firm performance, and the evolution of market structure in one industry, television receivers, where considerable information could be collected about an important class of potential entrantsÑfirms that produced radios prior to the start of the tv receiver industry. This is a particularly interesting group of firms because radio producers dominated the tv industry even though they accounted for a minority of entrants. Moreover, the tv receiver industry has drawn a lot of attention from researchers, particularly doctoral students, due to the sharp shakeout of producers it experienced and the eventual demise of all U.S. tv producers when the
The United States of America has been heralded as the world’s premier engine of technological adv... more The United States of America has been heralded as the world’s premier engine of technological advance. However, recent criticisms suggest that its technological advance may slow, causing economic decline relative to other nations. An examination of the U.S. institutions supporting research and development (R&D) and innovation, and how those institutions have changed over time, shows that the U.S. national innovation system is robust but that failures to invest in science and technology, education, and technologies that keep the U.S. industrial base competitive, create major challenges for the future if the U.S. is to remain a leading nation in creation of technologies and in the global economy. Specific sections address R&D incentives, government support, mix of entrepreneurial and large-firm capitalism, breadth of U.S. technology, R&D-performing and-supporting institutions, the history of U.S. innovation policy, state programs, recent policy initiatives, future innovation concerns,...
We model growth in dictatorships facing each period an endogenous probability of "political catas... more We model growth in dictatorships facing each period an endogenous probability of "political catastrophe" that would extinguish the regime's wealth extraction ability. Domestic capital exhibits a bifurcation point determining economic growth or shrinkage. With low initial domestic capital the dictator plunders the country's resources and the economy shrinks. With high initial domestic capital the economy eventually grows faster than is socially optimal.
The Stata Journal: Promoting communications on statistics and Stata, 2016
A new command, sreshape, supports sparse and speedy reshaping of data. Often reshaped data are "s... more A new command, sreshape, supports sparse and speedy reshaping of data. Often reshaped data are "sparse" in the sense of containing many missing values that are dropped after reshaping. sreshape automates the process of reshaping and dropping such missing information to avoid potential errors and, for both sparse and nonsparse data, yields speed improvements. Using large test datasets, sreshape achieves identical results to reshape 8 to 31 times faster in wide-to-long reshapes and 2 to 13 times faster in long-to-wide reshapes. Further suggested improvements may allow StataCorp to increase these speed gains in the built-in version.
Portland International Conference on Management of Engineering and Technology, Jul 29, 1999
The Limits to Growth debates of the 1970s raised the issue of whether (and how much) population a... more The Limits to Growth debates of the 1970s raised the issue of whether (and how much) population and economic growth is feasible. The first major global model, World3, was attacked as being unrealistic, and the initial attention it received largely faded within a few years. Unfortunately, key issues raised by the World3 model have been left unaddressed. Indeed, the bulk of criticisms of the model were misplaced or factually incorrect. I address anew how criticisms considered by economists and others can be accounted for in the model, and show that accounting for the criticisms does not alter policy recommendations based on the model. In-depth sensitivity analyses show that the policy recommendations are highly robust to parameter changes. Next, I use the model to estimate technological targets. The technological targets serve as benchmark goals in order to ensure that given amounts of population and industrial growth can be supported. The benchmarks based on the World3 model are crude approximations. More refined technology targets, currently being developed in continuing research, are based on a range of alternative models and assumptions about food, water, energy, material, and other requirements of population and industry. Such technology targets set goals that world society apparently must achieve in order to ensure that desired levels of population and economic growth can be supported.
The internet is often anticipated to have disruptive competitive impacts, causing upstart firms t... more The internet is often anticipated to have disruptive competitive impacts, causing upstart firms to overthrow incumbent market leaders. This paper uses the UK IT consulting industry as a test case to see whether such competitive impacts of the internet might already be occurring. Comparable possible impacts of the introduction of personal computers are also considered. Findings regarding the entry, exit, growth, and technology-related areas of business for new entrants and incumbents over a period of three decades suggest that the internet did not have such a radical effect on market structure by the year 2000.
The determinants of successful development, commercialization and diffusion of solid state lighti... more The determinants of successful development, commercialization and diffusion of solid state lighting (SSL) are not well understood particularly in a global context. Patent data provide one means to gain insight into corporate and national research and development activities. However, existing SSL patent analyses have focused primarily on United States (US) patents. This study analyzes SSL
I propose that sunk costs of learning and the output over which these costs are spread determine ... more I propose that sunk costs of learning and the output over which these costs are spread determine the probability and depth of technology adoption. Depth of adoption describes the extent to which firms exploit the advantages of the technology. I find that plant size but not firm size predicts CAD and CNC adoption. Learning costs are lumpy, are closely connected to technology adoption and determine both the probability and depth of adoption. Depth of adoption is considerably more plant idiosyncratic than the decision to adopt.
are examined among IT consultancies. Entry, exit, growth, and technology-related areas of busines... more are examined among IT consultancies. Entry, exit, growth, and technology-related areas of business during three decades do not exhibit disruptive effects of these shocks by 2001. Rather, IT consultants ’ PC and Internet business services maintained established competitive relationships between entrepreneurial entrants and incumbents. Recent entrants most often provided PC and Internet related services, but this neither enhanced their growth nor reduced their exit. The industry’s trade literature suggests why the PC and the Internet may rarely disrupt competition in any industry.
The United States of America (U.S.) has been heralded as the world's premier engine of techno... more The United States of America (U.S.) has been heralded as the world's premier engine of technological advance. However, recent criticisms suggest that its technological advance may slow relative to other nations. This chapter describes the U.S. National Innovation System, how it is evolving, and factors that threaten or reinforce its ability to generate technological innovations.A broadly encompassing encyclopedia on the emerging topic of technology innovation and management (TIM), this volume covers a wide array of issues. TIM is a relatively new field and is highly interdisciplinary, incorporating strategy and entrepreneurship, economics, marketing, organizational behavior, organization theory, physical and life sciences, and even law. All of these disciplines are represented in this volume, and their intersections are made clear. Entries are contributed by scholars from around the world who are leading experts in their respective topics. This volume is appropriate for scholars...
A theoretical model implies that technological opportunity drives industry evolution, fueling a s... more A theoretical model implies that technological opportunity drives industry evolution, fueling a spiral of advantage that allows a few firms to dominate in the long run in high technological opportunity markets. Distinctive implications are tested using new long-period, cross-sectional, cross-national (US and UK) industry data on narrowly-defined product markets. The process by which industries evolve to their static outcomes is found to occur similarly for the same industry in the different countries. Some industries have strong shakeouts in firm numbers and others not, confirming findings of Gort and Klepper (1982) on the first large set of alternative data. In industries with shakeouts entry eventually nearly ceases, but in industries without shakeouts entry remains high. Even in strong shakeouts there is not necessarily a rise in firms’ rate of exit coincident with the shakeout, confirming that shakeouts are not driven by single technological events. The theory and evidence expla...
Does industry competition depend largely on product-specific traits? If so, what traits matter ho... more Does industry competition depend largely on product-specific traits? If so, what traits matter how? A model is developed in which the nature of technological opportunities in an industry affects industry evolution over long periods following the inception of a product. Continuous-time firm decisions dictated by optimal control theory provide a mathematical basis for proofs of inter-firm differences and industry outcomes. Analysis of the model shows that, with firms optimizing discounted profit streams by choosing entry, exit, growth, and research spending, alternative industry dynamics arise depending on the degree of relevant technological opportunity. The theory provides an explanation for why some industries experience shakeouts and concentration while others do not, and matches with rich empirical findings reported in a companion paper.
Emergence of new industries from evolving technologies is critical to the global economy, yet has... more Emergence of new industries from evolving technologies is critical to the global economy, yet has been relatively understudied due to the paucity of available data. This study draws lessons on industry emergence, by analyzing how a solid-state lighting (SSL) industry grew out of light emitting diode (LED) technologies that evolved for half a century, with participation by tens of thousands of researchers in universities, national laboratories, and firms. Using data on publications, patents, and firms combined with business history we trace the evolution of SSL through a succession of market niches. At times a few researchers with unorthodox research approaches made breakthroughs that greatly advanced particular technology trajectories and pushed LED research in unexpected directions. A succession of LED market niches advanced the technology and provided profits to incentivize continuing research. Innovating firms developed a thicket of patents and captured substantial profit, but were embroiled in extensive litigation that was ultimately resolved through cross-licensing. A major new generation of lighting products is now disrupting the traditional lighting industry. Although the leading incumbent lighting firms all invested early and heavily in SSL, the industry's future leadership is uncertain.
We are entering an era of faster-paced competition as the lighting industry, which has been domin... more We are entering an era of faster-paced competition as the lighting industry, which has been dominated by a few firms (at least in the lamp sector), faces competition from new technologies, firms, and regions. Asian firms, as well as firms headquartered in the United States and Europe, have performed strongly in patent invention for solid-state lighting and are making key contributions to these new technologies. Both new firms and incumbents are investing heavily in solid-state lighting technologies, and it remains to be seen which firms will predominate. Public policy will likely play an important role in future developments by stimulating demand for energy-saving lighting, providing funding for R&D, and incubating startup companies as they seek to commercialize these new technologies. But retail firms like Wal-Mart are increasingly playing a role in the diffusion of energy-saving lighting technologies. We compare the policies of countries supporting development and diffusion of new lighting technologies and speculate about how these efforts may affect the location of R&D, manufacturing, and headquarters of surviving lighting producers.
Multinational patents and applications data, based on filings in patent authorities worldwide, ar... more Multinational patents and applications data, based on filings in patent authorities worldwide, are used as a means to probe corporate and national R&D roles in the emerging LED and SSL industries. The data are counts of patents, applications, or applications filed in at least two patent authorities, and do not have means to control for the importance of individual patents. Nonetheless they provide a helpful way to assess the companies and nations involved in LED and SSL research in general and in specific technological sub-domains. Some of the leading companies and nations are reported on. The data show Samsung's rapid rise to prominence in these technologies. They indicate a greater role of nations other than the U.S. than has been noted in previous patent analyses, since the tendency of applicants to file predominantly in their home countries has meant that counts based solely on U.S. patents have missed large numbers of non-U.S. applicants active in this technology while still counting U.S. applicants that filed solely in the U.S. They reveal growing activity in Asia, partly in Korea because of Samsung's role, and partly in Taiwan and mainland China.
I propose that sunk costs of learning and the output over which these costs are spread determine ... more I propose that sunk costs of learning and the output over which these costs are spread determine the probability and depth of technology adoption. Depth of adoption describes the extent to which firms exploit the advantages of the technology. I find that plant size but not firm size predicts CAD and CNC adoption. Learning costs are lumpy, are closely connected to technology adoption and determine both the probability and depth of adoption. Depth of adoption is considerably more plant idiosyncratic than the decision to adopt.
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Papers by Kenneth Simons