| Are Technology-Intensive Industries More Dynamically Competitive? No and Yes
The Question
A substantial body of research in management and related public policy fields has revealed greater dynamic competition throughout technology-intensive (TI) industries in recent decades, with a widespread steady increase in TI industry and business performance instability as key implications. In their paper, “Are Technology-Intensive Industries More Dynamically Competitive? No and Yes,” Associate Professor Paul Vaaler, and Michigan State University Professor Gerry McNamara, PhD ’95, set this conclusion within a broader framework of purportedly increasing dynamic competition among TI industry business and then test for evidence of its performance implications. Their paper will be published later this year in Organization Science.
The Findings
Vaaler and McNamara analyzed a large sample of U.S. businesses operating from 1978 to 1997 in 31 industries, with high average research and development expenditure-to-sales ratios. They found no evidence of sustained increases 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. Contrary to the claims of many management researchers, corporate executives and public policy commentators, there is no broad evidence that it was any harder or easier to gain and sustain performance advantages in TI industries from the late 1970s to the late 1990s. (They did, however, uncover some evidence of increasing performance instability in a small segment of very high-performing businesses from TI industries consistent with assumptions of increasing dynamic competition in TI industries.) Because the assumptions of long-term increases in competition lack robust evidentiary support, it’s premature to embrace and apply broadly new theoretical perspectives, management practices, and public policies to TI industry competitive dynamics. In short, tried and true ideas about how to manage and regulate TI firms remain just as valuable today as they were a generation ago.
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