Product Strategies and Survival in Schumpeterian Environments: Evidence from the US Security Software Industry

Abstract

This paper seeks to explore the drivers of survival in environments characterized by high rates of entry and exit, fragmented market shares, rapid pace of product innovation and proliferation of young ventures. The paper aims to underscore the role played by post-entry product strategies, along with their interaction, after carefully controlling for `at entry' factors and demographic conditions. Based on a population of 270 firms that entered the US security software industry between 1989 and 1998, we find evidence that surviving entities are those that are more aggressive in the adoption of versioning and portfolio broadening strategies. In particular, focusing on any one of these two strategies leads to a higher probability of survival as opposed to adopting a mixed strategy.