Resource space dynamics in the evolution of industries: formation, expansion, and contraction of the resource space, and its effects on the survival of organizations

Received literature on the evolution of industries tends to treat the resource space upon which an industry feeds as stable. Resources available for any focal industry are seen as a given, which is rather fixed in the short-run, externally defined, and independent from the industry itself. Nevertheless, such a view is mechanistic and takes into account only some dimensions of the resource space, thus capturing reality only partially. If, on the contrary, one allows for the resource space to be dynamic, a very different picture emerges. If the resource space needs to be created instead of being a given, and if it can expand and contract depending on the value that different stakeholders attach to the focal industry, then a number of dynamics that appear to be puzzling in the evolution of industries, can find a straightforward explanation. This dissertation aims at contributing to theory by proposing such a dynamic and multi-dimensional view of the resource space, where social resources and a shifting public attention significantly affect the evolution of novel industries. Furthermore, it examines the effects of such a dynamic resource space on the skills required from organizations at different stages of the industry's evolution, the decisions of entrepreneurs to enter and exit the industry, and the survival chances of organizations.;Emerging industries rarely find a readily available resource space upon which to feed. Quite on the contrary, they need to create one by essentially convincing social gatekeepers about the worth of the industry and the legitimacy of its claims to have resources directed towards it. As the merit of any new industry is seldom objective, but rather the result of a constant social and cultural debate, some industries will fail in this competition for resources and never take off. Some others, though, will do exceedingly well, becoming popular and highly visible, and thus enjoying access to a temporarily expanded resource space. Such changes in popularity and in the ease of access to resources over different stages of an industry's evolution imply that different skills are required from organizations entering at different phases of this evolution. Pioneers, entering an industry that is still new and unknown, have to face the dual liability of both their own young age and the still unclear identity of the new industry. Being forced to focus on promoting the new organizational form, they are likely to devote fewer resources to optimally developing their internal structures. Furthermore, having to cope with a hostile or at best unacquainted public, they will create structures that, while useful in promoting the new form in its early evolutionary stages, will be of rather limited value as soon as the industry matures. Such pioneers then, having laid the ground for the development of the novel industry, find themselves ill-suited to cope with an intensifying competition from organizations that enter later and develop capabilities that better fit a mature industry.;As soon as the novel industry gains legitimacy and visibility, the dynamics of entry and survival change. Whereas early entrants, lacking any role-models or existing organizational blueprints to follow, are driven mostly by efficiency concerns and a high perceived fit with the emerging industry, late-movers are often driven by a faddish imitation of prior successes or the non-pecuniary returns that are associated with participation in a novel field. Concerns about fit or the ability to survive in the long-run become of lesser importance, as the industry's increasing visibility and popularity offer temporarily easy access to resources and alter the entrepreneurs' motivations of entry. Such an inflation of the social dimensions of an industry's resource space and the resulting change of the motives of entry have a dual effect on the evolution of density. First, decoupling entry from the availability of economic resources and the ability to survive, they imply that entry well in excess of the long-term carrying capacity can occur and endure temporarily. Second, as entry at such later stages becomes unrelated to fit, and is rather the result of faddish imitation or a will to participate in the "wave of future", organizations of inferior fit should be disproportionally numerous in cohorts of late entrants. In this light, the elevated failure rates of late-movers might have to be interpreted more as a result of their underlying inferior average fit, rather than as the effect of an unfavorable timing of entry. Furthermore, to the extent that increased public attention can lead to excessive entry, subsequent abrupt declines of density can be more a result of a reversion closer to the long-term carrying capacity, rather than an effect of concentration or technological discontinuities.;A dynamic and multi-dimensional view of the resource space has thus direct implications for the interpretation of the dynamics of industry evolution. Most importantly, it highlights the importance of social forces in this process, and aims at showing how their incorporation in theory and empirical analysis can supplement and significantly improve our understanding of industry evolution.