Emergence and Evolution of An Industry: Exploration of Distinct Roles of Demand Pull and Supply Push

Abstract

Innovation is the main driver of emergence and evolution of industries. Generation and dissemination of innovation points to the vital importance of knowledge exchange among multiple, socially-situated actors and a wide variety of organizations, including firms, trade associations, universities, governmental and non-governmental institutions, and – though they are often omitted from explicit consideration – consumers, as well. The importance of these supply-side and demand-side interactions is particularly pronounced in emergent sectors characterized by extreme dynamism in the generation, accumulation, exchange, and evolution of knowledge. Despite the symbiotic nature of supply-side and demand-side forces, skepticism has persisted regarding the determinative impact of demand-side forces, a bias that has constrained purposeful investigation of the manner in which demand-side forces shape innovation and influence the trajectory of sector emergence and evolution. Addressing this gap, this study examines how and to what extent supply and demand side forces in a high technology emergent context—i.e., small satellite industry— contribute to innovation over the industry lifecycle. The results suggest that demand is an indispensable contributor to emergence and evolution of technologies and new sectors; and the nature of its contribution varies over the industry lifecycle.