Surviving the Gales of Creative Destruction: Determinants of Product Survival in the Desktop Laser Printer Industry

In this paper, we examine the product life cycle in the desktop laser printer industry, from its inception in 1984 through 1996. During this time, the industry experienced a significant degree of innovation, as well as an enormous amount of product introduction and subsequent exit. The relative roles of market structure, innovation, and firm effects are explored in more detail using a multidimensional product space. We introduce a very detailed product-level dataset on the desktop laser printer industry. We have a number of findings: (1) product portfolios of firms are growing larger on average, as fewer firms offer more products; (2) products on the technological frontier have better survival prospects than printers behind the frontier; (3) product characteristics, such as page description language, speed, and resolution, have the largest effect on product survival rates; (4) awards granted to models and firms by leading PC publications have no effect on hazard rates of the current product portfolios of firms, but lead to much higher entry rates by the firm; and (5) while there are many similarities between dominant and fringe firms, differences in innovative and product life cycle behavior persist which is often overlooked in current studies of economic activity. * Sloan School of Management and Department of Economics, respectively (MIT E52-545, 50 Memorial Drive, Cambridge, MA 02142-1347, 617-258-7253, [email protected] or [email protected]; Work reported was supported (in part) by the MIT Center for Innovation in Product Development under NSF Cooperative Agreement Number EEC9529140. We would like to thank Jack Nickerson for assistance with the data. All errors are the sole responsibility of the authors.