The fates of de novo and de alio producers in the American automobile industry 1885-1981

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Citation: Glenn R. Carroll, Lyda S. Bigelow, MARC-David L. Seidel, Lucia B. Tsai (1996) The fates of de novo and de alio producers in the American automobile industry 1885-1981. Strategic Management Journal (RSS)
DOI (original publisher): 10.1002/smj.4250171009
Semantic Scholar (metadata): 10.1002/smj.4250171009
Sci-Hub (fulltext): 10.1002/smj.4250171009
Internet Archive Scholar (fulltext): The fates of de novo and de alio producers in the American automobile industry 1885-1981
Tagged: Business (RSS) Organizational Ecology (RSS), Automobiles (RSS), Sociology (RSS), Organization Theory (RSS)

Summary (Abstract)

Lead by Glenn Carroll, a large team offers an ecological approach to entrepreneurship by asking if laterally diversifying firms (i.e., de alio firms) outlast new starts-up (i.e., de novo).

The authors use data that includes a comprehensive list of all firms involved in the automobile industry in the United States. They compare de novo startups designed to sell cars with firms that diversified from other industries -- particularly the bicycle, carriage, and engine industries. They argue that while ecology has looked at age dependence and density dependence, there has been very little attention to the type of firms entering markets or organizational variation in founding events. They suggest that de novo and de alio entrants will differ in their mortality rate based on where in the life cycle.

In particular, the authors hypothesize (H1) that de alio entrants will have more resources and will have lower initial death rates than de novo entrants. They also suggest that (H2) de novo entrants who spent time in preproduction will have spent more time planning and gathering resources and will last longer than other de novo firms that do not. They suggest both these advantages will diminish over time (H3), that both will have an inverted U relationship with organizational density (H4), and that de alio producers from certain industry (they suggest engine-making) will do better than others (H5).

They find strong support for all five hypotheses although their suggestion about engines turns out to be wrong. Bicycle-makers and carriage makers end up doing better than engine makers, a result that the authors don't have a good explanation for but that lies someone outside their major point.

Their basic result is strongly in support of basic ecological findings (e.g., H4 which essentially just supports density dependence) but takes it beyond and suggests a link to resource-based views of firms and a very clear takeaway about organizational mortality being higher for de novo entrants than de alio entrants.

Theoretical and Practical Relevance

The paper has been cited more than 150 times by 2010. Many of these citations were by literature on tha auto industry, by the literature on capabilities and, indeed, by work on resource-based views of the firms.