Product Demography of De Novo and De Alio Firms in the Optical Disk Drive Industry, 1983–1999

Abstract

Little theory and research addresses the ways organizational context affects the demography of products. We examine this question here by focusing on an organization's mode of market entry. Specifically, we explore differences between firms entering a market de novo (start-up) and those entering de alio (diversification from another market). We analyze all products ever shipped in the worldwide optical disk drive (ODD) industry, 1983–1999. We find an almost paradoxical empirical pattern, whereby de novo firms typically introduce products with widely agreed upon “better” (that is, universally more appealing) technological characteristics. Yet these products generally stay on the market for a shorter time than those of de alio firms, whose products generally display less appealing technological features.