Doomed from the start: what is the value of selecting a future dominant design?

Strategic Management JournalStrat. Mgmt. J.,20: 495–518 (1999)

DOOMED FROM THE START: WHAT IS THE VALUEOF SELECTING A FUTURE DOMINANT DESIGN?

LINDA F. TEGARDEN*, DONALD E. HATFIELD and ANN E. ECHOLSR. B. Pamplin College of Business, Virginia Polytechnic Institute and State Univer-sity, Blacksburg, Virginia, U.S.A.

This study investigates how important it is for a firm to select what turns out to be a dominantdesign in a technology-driven industry. Using the personal computer industry as a case study,this research shows that firms are not doomed when their entry design choices turn out to be‘wrong.’ For early entrants, we found that switching to the dominant design is associated withincreased chances of survival and market share. Contrary to our expectations, we found thateven later entrants that switched to the dominant design also enjoyed higher survival ratesand greater market position.Copyright 1999 John Wiley & Sons, Ltd.

INTRODUCTION

Entry timing, in terms of entry order (Mitchell,1991) and in relation to emergence of a dominantdesign (Suarez and Utterback, 1995), is relatedto firm survival and performance. However, earlyin a new technology’s development, it is not clearwhich competing product design will emerge todominate (Arthur, 1987). The importance ofchoosing the technology that eventually turns outto be the dominant design has not been thor-oughly investigated. This study fills the void byadding firms’ product design choice (entry designchoice and changes in this initial design choice)to explain survival and market share. Specifically,this study investigates if firms are doomed fromthe start when they enter with a design that doesnot turn out to be the dominant design.

When a firm is making the choice of when toenter an emerging industry, it faces a difficulttrade-off. Does the firm enter early in order to

Key words: technology choice; dominant design;entry timing* Correspondence to: Linda Tegarden, R. B. Pamplin Collegeof Business, Virginia Polytechnic Institute and State Univer-sity, Blacksburg, VA 24061-0233, U.S.A.

CCC 0886–9383/99/060495–24 $17.50 Received 15 September 1997Copyright 1999 John Wiley & Sons, Ltd. Final revision received 23 November 1998

gain first mover advantages or does the firm waitin order to minimize the probability of lossesassociated with choosing a product design thatdoes not emerge to dominate (Arthur, 1989, 1990;David, 1988; Mitchell, 1989)? This trade-offexists when the dominant design can be imitated(Lieberman and Montgomery, 1988). Previousstudies (Mitchell, 1989; Suarez and Utterback,1995) have investigated the importance of entrytiming in this relationship, but have not looked atthe importance of choosing the dominant design.

We investigate several key questions for man-agers and researchers regarding product designchoice. Is a firm doomed if it initially selects adesign that does not become dominant? Does thefirm improve its chances of success when itchanges its product design? How important is itfor firms to choose the dominant designbeforethe dominant design emerges? Is choice of prod-uct design related to successafter the dominantdesign emerges and becomes a known decisionfactor to potential entrants? Are survival andmarket share commensurate indicators of successwith product design choice? To answer thesequestions we evaluate relationships betweenfirms’ success and microprocessor technologychoice in the personal computer market.

496 L. F. Tegarden, D. E. Hatfield and A. E. Echols

Background and Hypotheses

The punctuated equilibrium model is a widelyused framework employed to describe organi-zational adaptation to technological change andevolution (Gersick, 1991; Romanelli and Tush-man, 1994; Tushman and Romanelli, 1985). Cen-tral to this model is the concept of the dominantdesign (Utterback and Abernathy, 1975). Wedefine a dominant design as a single architecturethat becomes widely accepted as the industrystandard (Anderson and Tushman, 1990; Sahal,1981). The architecture often is a system ofcomponents, each of which may also be dominantdesigns in their own right (Afuah, 1998). Emer-gence of a dominant design or the ordination ofstandards creates direction from chaos and marksthe transition between a period of ferment toa period of incremental change (Abernathy andUtterback, 1978). The dominant design decreasesthe uncertainty associated with a technologicaldiscontinuity by serving to lock-in a productdesign supported by a ‘bandwagon’ of firms,customers, and suppliers (Wade, 1995).

The ability to predict which design will win isan uncertain process. Yet the increasing returnshypothesis (Arthur, 1987) lends to our under-standing of why firms might want to choose thedominant design. When network externalities orcompatibility issues are important, products whichembody the dominant design will increase invalue as more adopters (customers, suppliers, andother firms) choose it. Future expectations indi-cate that a single design will in fact emerge todominate. Therefore, firms are highly motivatedto jump on the ‘right’ bandwagon. Under thesetechnological bandwagon conditions (Wade,1995; David, 1985; David and Greenstein, 1990),the strength of the support for a design shouldaffect firm success.

Since the dominant design represents the ‘win-ning’ technology, the expected pay-offs fromchoosing the dominant design are higher. In mostcases, the dominant design becomes the singlearchitecture that is widely accepted as the industrystandard, so that other designs are for the mostpart abandoned (Anderson and Tushman, 1990;Sahal, 1981). Even when more than one tech-nology persists (Arthur, 1987), increasing returnsassociated with technology lock-in suggests thatfirms should adapt to product design choices thatgain in organizational support. Once a dominant

Copyright 1999 John Wiley & Sons, Ltd. Strat. Mgmt. J.,20: 495–518 (1999)

design emerges, future technological change rep-resents incremental change that elaborates thebasic design until the next discontinuity restartsthe cycle (Abernathy and Utterback, 1978). Thepower and influence of the dominant design,therefore, leads us to hypothesize that:

Hypothesis 1: Firms which select the domi-nant design will be more successful than firmswhich do not select the dominant design.

Next, we propose that an optimal design choicestrategy depends on whether a firm enters beforeor after a dominant design emerges. Prior to theemergence of the dominant design, a firm facesa plethora of design choices in the period oftenreferred to as the ‘Period of Ferment’ (Abernathyand Utterback, 1978; Anderson and Tushman,1990). Which design will eventually emerge tobe the dominant design is rarely apparent earlyin the development of a new technology advance-ment. In contrast, this design uncertainty declinesduring a ‘Period of Incremental Change’ once adominant design emerges. In this later period,much technology advancement is based on elabo-ration of the dominant design. Therefore, wepropose that two design strategies are related tosuccess. Firms will either: (1) enter early and, ifnecessary, change to the dominant design; or (2)wait to enter to increase the likelihood that theychoose the dominant design the first time. Thearguments and hypotheses that support these twodesign strategies are developed below.

Since dominant designs tend to be evolutionsof innovations and not the innovation itself(Anderson and Tushman, 1990), most initialproduct design choices made by early entrantsare not expected to emerge to dominate. Mostearly designs are for the most part abandoned(Anderson and Tushman, 1990; Sahal, 1981).Therefore, early entry during the period of fer-ment can result in first mover advantages (Arthur,1989, 1990; David, 1988; Lieberman andMontgomery, 1988; Mitchell, 1989) only if firmsdevelop the capability to change product designs.1

1 Iansiti and West (1997) and Iansiti and MacCormack (1997)have discussed in great detail the importance of flexibleproduct development which might allow a firm to be able tomore easily change product designs. When industries are inturbulence, they argue that the need to test prototypes andexamine alternative technologies is more important than whenthe technology, product features, or competitive environmentare predictable, or evolve more slowly.

Value of Selecting a Future Dominant Design 497

Firms that enter prior to the emergence of thedominant design tend to minimize their invest-ment in specialized assets that support a singledesign (Abernathy and Utterback, 1978; Teece,1986) because they know there is a high prob-ability that their first choice will not emerge asthe dominant design. Therefore, we expect afirm’s design choice at entry not to be related tosuccess. What matters is whether firms that enterprior to emergence of the dominant design canadapt to the dominant design when it emerges.So, firms that enter during the period of fermentmust adapt to different rules of competition underthe subsequent period of incremental change(Abernathy and Utterback, 1978; Teece, 1986;Utterback and Suarez, 1993), as well as switchto the dominant design. These arguments suggestthe following predictions of success for firms thatenter before emergence of the dominant design:

Hypothesis 2a—Entry Choice: When entryoccurs before a dominant design emerges,firms which select the dominant design at entrywill not be more successful than firms whichdo not select the dominant design at entry.

Hypothesis 2b—Design Strategy: When entryoccurs before a dominant design emerges,firms that end up with the dominant designare more successful than those firms whichend up with an alternative design.

After emergence of the dominant design, thedecision regarding which technology will be thebasis of future designs is less unknown to bothnew firms and established firms. Uncertaintyassociated with technology choice declines.Strength of support by customers, suppliers, andfirms offering complementary products createscomparatively higher value when they offer prod-ucts that embody the dominant design. Firms thatchoose an alternative design increase their riskafter a dominant design emerges, regardless ofwhy a different choice was made.2 In any case,we expect that firms are likely to be less success-ful when offering an alternative design after adominant design emerges.

Switching designs for later entrants also means

2 Choice of a different design could be a mistake, an attemptto offer a competing design to overturn the dominant design,or an effort to serve a market niche.


that they face greater competition from rivals thatalso offer products with the dominant design.Investment in specialized assets during the periodof incremental change is often a race to establishfirst mover advantages. Thus, firms pay a greaterpenalty when they enter during the period ofincremental change with an alternative choice andthen switch to the dominant design because theyare late in the race to develop specialized assetsfor the dominant design. We therefore hypothe-size the following relationships when firms enterafter emergence of the dominant design:

Hypothesis 3a—Entry Choice: When entryoccurs after a dominant design emerges, firmswhich select the dominant design at entry willbe more successful than firms that select analternative design at entry.

Hypothesis 3b—Design Strategy: When entryoccurs after a dominant design emerges, firmswhich select the dominant design upon entryand never use an alternative design will bemore successful than those firms that do notalways use the dominant design.

METHODS

Sample

We analyzed manufacturing firms’ technologychoices in the U.S. personal computer market forthe 17-year period 1975–91. The year 1975 marksthe beginning of the U.S. personal computerindustry with the introduction of the Altair, thefirst personal computer offered for broad commer-cial sale (Anderson, 1995). The personal com-puter market represents several advantages instudying technology choice. First, it supports sev-eral product designs that compete with the domi-nant design. Second, there are low buyer switch-ing costs among personal computer models thatembody the similar product design (e.g.,microprocessor), but there are high buyer switch-ing costs between rival designs (e.g., Motorolaand Intel)—although these switching costs havediminished with time. Third, network externalitiesin this industry exist, increasing the need to havea single design among users even though compe-tition between designs persists. Fourth, this mar-ket has also experienced high growth in bothcustomers and the number of competitors, making


it well suited for studying the influences of rivalryand demand over the evolution of the personalcomputer market. Fifth, there is consensus thatthe introduction of the IBM PC effectivelychanged the nature of competition in the personalcomputer market by introducing a clear standardarchitecture which would be the basis for futureinnovations and improvements.

We track firms’ microprocessor choices to testdesign choice. While the microprocessor is onlyone component3 that comprises a PC design archi-tecture, the word length (or bit length) associatedwith it specifies performance limitations and con-straints for much of the other technology compo-nents required to operate a personal computer(Anderson, 1995). As Anderson (1995: 38) states:

% a microprocessor defines a computer’s funda-mentallogical architecture. Designing a computeraround a microprocessor is not a trivial exercise,and microcomputer manufacturers make criticaldesign choices that differentiate one machinefrom another. Yet the fundamental logic of themachine—its instruction set and how it treatsinstructions—is dictated by the semiconductormanufacturer that produces the microprocessor.All firms that build machines around the popularIntel ‘iAPX’ chip family, for example, acceptcommon constraints on the way data are proc-essed in their products.

A change in microprocessor is associated withhigh switching costs for the PC manufacturerbecause semiconductor manufacturers tend to pro-duce unique and incompatible designs. Both PCsoftware and drivers for peripherals must bedesigned around the microprocessor (Baldwin andClark, 1997). Wade (1995) points out that evensimilar designs like the Z80 and 8080 are incom-patible. Even though the 8080’s instruction setwas a subset of the Z80 instruction set, the factthat the Z80 had over 50 more instructions anda unique bus structure make the two designsincompatible. Wade further argues that ‘the tech-nological trajectories of the two products[microprocessors] which are only partially com-patible and have different capabilities or features

3 We would like to thank the reviewers for pointing out thetechnology of a component is not a dominant design, butrather a component that contributes to the dominant design,‘similar to an engine of an airplane, or a motor of a car.’Afuah (1998) notes that each of the components of a dominantdesign can be dominant designs within their own technologies.


are likely to diverge over time if they have twoindependent sponsors’ (Wade, 1995: 121).

Switching costs also go well beyond the prod-uct changes to include the costs associated withcoordinating a product component change withinthe organization as well as between suppliers andcustomers. Riggs (1983) suggests that a firmattempting to modify a design will face costs dueto modifying documentation, increased communi-cation between marketing, engineering and pro-duction, obsolete inventory, and the lost time ofkey personnel which need to deal with theunknowns associated with quality and perform-ance variations in their product. In addition, themanufacturer must undertake search costs (bothmoney and time, involving in some cases bothsuppliers and buyers), set up new externalrelationships, and face uncertainties in input qual-ity. Iansiti (1993: 139) points out that for a prod-uct:

% its manufacturing process, and the needs ofits users constitute a system and should bedeveloped as such. Any changes in this productsystem % will change the entire design andmanufacturing process. In turn, these changes canlead to development dead ends, longer productrollouts, and many wasted hours%

Because of the dependencies of the other tech-nology components on the microprocessor designand the organizational costs associated withchanging a product design, the microprocessor isa suitable technology component for studyingdesign choice in the personal computer market.

The IBM PC is considered to be the productarchitecture that emerged as the dominant design(Afuah, 1998; Anderson, 1995; Stavins, 1995).IBM’s introduction of their ‘IBM PC’ in late1981 stimulated high customer response and imi-tation from rivals. Compaq’s initial model intro-duced in 1982 represents the first of many IBMcompatible designs. The acceptance of the IBMPC architecture as the dominant design in thepersonal computer industry also pulled many ofits components into becoming dominant designs(e.g., Microsoft’s DOS operating system) withintheir own technology. The Intel microprocessorbecame the dominant microprocessor designwithin the personal computer dominant design(Afuah, 1998). By 1985, the Intel microprocessorwas embodied in the majority of personal com-puters shipped (55% or 175 out of 277 firms


shipping personal computers used an Intelmicroprocessor).

The study sample consisted of the 463 PCmanufacturing firms that entered from 1975through 1988. We tracked their microprocessorchoices and performance through 1991. Laterentry firms were not included because we wantedto allow at least a 2-year interval between thetime a firm entered into the industry and the timewe measured market share and survival. Producttiming and product design information wereobtained from the Processor Installation Censusby International Data Corporation that reportedproduct and shipment information for firms thatshipped personal computers in the United Statesbetween 1975 and 1991. We used other productand industry sources to provide additional datafor both product technology and industry struc-ture measures.

Dependent variables and methods

Success measures were constrained by our sam-ple, which included many small, private firms.Success was operationalized using survival andmarket share in the PC market. To estimate sur-vival models, we measured duration as the num-ber of years the firm shipped personal computers.Duration for the 463 firms ranged from 1 to 17years with an average of 5.30 years (S.D.= 3.10years). Among our sample, 40 percent (184/463)were still shipping personal computers in 1991.For tests of associations between independentvariables and survival, we used Cox ProportionalHazard Regression (Cox and Oakes, 1984), whichestimated a hazard profile. Since hazard is theopposite of survival, hypotheses were supportedwhen the design choice variable coefficient wassignificant and in the opposite direction of thestated hypotheses.

We examined market share as another indicatorof firms’ success. Our objective was to examinea range of years in which Intel microprocessorswere embodied in a large proportion of totalindustry shipments, and which allowed for theevolution of the industry following the introduc-tion of the dominant design. We chose four years(1984, 1986, 1988, and 1990) to investigate howthe evolution of the market influenced therelationship between product design choice andmarket share. We included only those firms thatwere shipping computers at least 1 full year prior


to the market share year to reduce the effectsassociated with the liability of newness. The firmsalso had to be shipping at least 1 full year afterthe market share year. While these restrictionsfocused our market share analysis on ongoingfirms, they also may have increased survivorbias; therefore, our market share results must beinterpreted while considering our survivor analy-sis (Mitchell and Singh, 1993).

Market share was computed as the percent ofa firm’s annual U.S. personal computer shipmentsto total U.S. personal computer unit shipments.We used the natural logarithm of market sharebecause high market share outliers severelyskewed the distribution. This is characteristic offragmented industries with a few, large dominantfirms and a multitude of small firms. We usedordinary least squares regression (Johnston, 1984)to estimate the market share relationships. Sincedirection was being tested, research hypotheseswere supported when design choice coefficientswere significant and in the stated direction ofthe hypotheses.

Independent variables

Two variables were constructed to test the pro-posed main effect, the choice of the dominantdesign. These two variables examined the choiceof the Intel microprocessor as a component domi-nant design, and were: (1) Entry Choice and; (2)Design Strategy, which included design changesover time relative to the Intel microprocessor.Figure 1 summarized the two design choice vari-ables as a decision tree. Firms chose the dominantdesign component when they shipped a personalcomputer with an Intel iAPX microprocessor(8008, 8088, 8086, 80286, 80386, and 80486).Entry Choice was coded 1 when a firm’s entrymodel embodied an Intel microprocessor design(Entered with Intel MP) and 0 when it didnot (Entered with Other than Intel MP).Of the 463 firms, 71 percent entered with theIntel microprocessor and 29 percent entered withan alternate design choice.

Firms were also classified to indicate fourDesign Strategy alternatives that accounted fordesign changes after entry: (0) never chose theIntel microprocessor (Never Chose the IntelMP); (1) chose the Intel microprocessor at entryand never changed (Intel–No Change); (2)chose the Intel microprocessor after first using at


Figure 1. Firms’ design choice proportions: Full sample [entered 1975–88]

least one other microprocessor (Other Design–Change); and (3) chose the Intel microprocessorat entry and changed to a different design lateron (Intel–Change). For our sample of 463firms, 18 percent never introduced a model withthe Intel microprocessor, 70 percent used theIntel microprocessor design at entry and neverchanged, and 11 percent used the Intel microproc-essor design some time after entering with analternative design, and 1 percent entered withthe Intel microprocessor and changed. We usedcategory 0 (Never Chose the Intel MP) as areference category to test whether or not choiceof the dominant design improved success.

We divided the sample into era of ferment andera of incremental change samples to test thesecond and third sets of hypotheses, respectively.Emergence of the dominant design divided thetwo eras. Consistent with Suarez and Utterback(1995), we defined emergence of the personalcomputer dominant design as the year in whichit was first introduced. The introduction of theIBM PC is widely accepted as the time thedominant personal computer design emerged


(Afuah, 1998; Anderson, 1995; Stavins, 1995).Using the personal computer industry for researchon the impact of the dominant design choiceavoids many of the limitations involved withtrying to define when the dominant designemerged (Suarez and Utterback, 1995).4 SinceIBM introduced their IBM PC in October, 1981,which represents less than half a year, we chose1982 as the year that the personal computerdominant design emerged (Afuah, 1998; Ander-son, 1995; Stavins, 1995). Firms were classifiedas entering during the ‘Era of Ferment’ (beforethe dominant design emerged) if they enteredbefore 1982. Firms were classified as enteringduring the ‘Era of Incremental Change’ (after thedominant design emerged) if they entered during1982 or later. Figures 2 and 3 report designchoice proportions for the Era of Ferment andEra of Incremental Change samples. Proportionsacross Entry Choice and Design Strategy vari-

4 In some studies, a dominant design was defined as one thathad achieved at least a 50 percent market share. See Suarezand Utterback (1995) for a critique of such definitions.


Figure 2. Firms’ design choice proportions: Era of Ferment sample [entered 1975–81]

Figure 3. Firms’ design choice proportions: Era of Incremental Change sample [entered 1982–88]



ables vary between the two subsamples. Asexpected, a higher proportion of firmsswitchedto the Intel microprocessor design when theyentered before the dominant design emerged (seeFigure 2) than those which entered in the periodafter the dominant design emerged (see Figure3). A higher proportion of firms entered with theIntel microprocessor design when they enteredafter the dominant design emerged than for firmswhich had entered in the earlier period—anotherfinding consistent with our expectations. Also, asexpected, only 11.7 percent of the firms thatentered into the personal computer industrybetween 1975 and 1988 switched microproc-essors —consistent with the high switching costsassociated with microprocessor choice.

Control variables

Control variables were used to account for alter-native explanations of industry and firm-levelindicators (Mitchell, 1991; Mitchell and Singh,1993; Suarez and Utterback, 1995). Two sets ofvariables were employed to control for entry tim-ing. A firm’s entry time (Entry Clock) wasmeasured as the number of months from January,1975—the beginning of the personal computermarket (Anderson, 1995). Entry time has beenshown to result in a trade-off between survivaland market share (Mitchell, 1989, 1991). Latertiming was expected to be positively related tosurvival, and negatively related to market share.The square of entry time (Entry ClockSquared) was also included to control for mid-range timing effects, following Mitchell andSingh (1993). Following Suarez and Utterback(1995), we controlled for entry timing relative tothe time the dominant design emerged (BeforeDD Clock and After DD Clock). For firmsthat entered before the dominant design emergedduring the Era of Ferment,Before DD Clockwas coded as the number of years entry occurredbefore the emergence of the dominant design,while After DD Clock was coded as 0. Forfirms that entered after the dominant designemerged during the Era of Incremental Change,Before DD Clock was coded as 0, and thevalue ofAfter DD Clock was set to the numberof years entry occurred after the emergence ofthe dominant design. We expected survival andmarket share to be positively related toBeforeDD Clock, and negatively related toAfterDD Clock.


We also controlled for market conditions at thetime of entry and, if relevant, exit. Industry den-sity (Hannan and Freeman, 1988; Carroll andHannan, 1989) was measured as the number offirms in the market for the year prior to thefirm’s entry year (Number of Rivals at Entry)and was expected to be negatively related tosuccess. Market size at the time of the firm’sentry was also expected to be related to success(Suarez and Utterback, 1995). Industry unit salesfor the year prior to entry (Industry Size atEntry) measured market size. We also includedindustry sales growth for the year of a firm’sexit (Industry Growth at Exit) in the hazardanalysis to control for effects of business cycles(Suarez and Utterback, 1995). Failure wasexpected to be higher when the growth ratewas weaker.

We added an additional firm-level control vari-able, average annual price (Average Price), forthe market share regressions. Average annualprice was the weighted average price across allmodels a firm shipped for a given year. Wecalculated average annual price to correspondwith each market share year—1984, 1986, 1988,and 1990.5

RESULTS

We discuss results of control variables first. Inthe hazard regression models that included allcontrol variables together, industry growth at exitwas the strongest (the only significant) predictorof the hazard rate. This was evident in the fullmodels reported in both Appendix 1 and Tables1 and 2. Among the market share models reportedin the remaining tables (Tables 3, 4 and 5),average price was the strongest (and only

5 Because we were examining market share for the same yearacross firms within a single industry, we could not controlfor industry structure. Quality and advertising intensity arefrequently used control variables (Bowman and Gatignon,1996; Kalyanaram and Urban, 1992; and Szymanski, Troy,and Bharadwaj, 1995) but were not used in our study. Thesefirm-level control variables were excluded because of our datalimitations associated with inclusion of small private firmsand the longitudinal constraints of our data sources. We alsoinvestigated ‘brand name’ (Bresnahan, Stern, and Trajtenberg,1997; Lawless and Anderson, 1996; Stavins, 1995) as acontrol variable. Lawless and Anderson defined ‘brand name’as total sales over a series of years; however, since marketshare is strongly related to brand name, we chose not toinclude it in our model. We found our results to be robustregardless of inclusion of this measure.


significant) predictor of market share among thecontrol variables.

Bivariate relationships are reported inAppendices 1 and 2. We found that the relation-ship between entry timing (Entry Clock,Before DD Clock, and After DD Clock) andhazard rate was moderated by pre- and postdomi-nant design entry. When entry occurred duringthe era of ferment, firms’ hazard rates increasedwith later entry timing (see Appendix 1B). Whenentry followed the emergence of the dominantdesign, firms’ hazard rates were not related toentry timing (see Appendix 1C). This is consis-tent with some results reported by Suarez andUtterback (1995). Appendix 2 presents the corre-lations between the variables and the natural logof market share for 1984, 1986, 1988, and 1990for the full sample only. Associations did notsubstantially differ within the pre- and postentrysamples so they were not reported. The corre-lations between the various control variables andmarket share were significant and in the expecteddirection across all years, except forAfter DDClock and 1984 market share.

We tested hypothesesafter controlling for alter-native explanations. Control variables were highlycorrelated with each other as well as the testvariables, Entry Choice and Design Strategy, asshown throughout Appendix 2. Even though vari-ables are multicollinear, results with and withoutcontrol variables were consistent for the test vari-ables (models without control variables are notreported in this paper).

Hypothesis 1: Firms which select the domi-nant design will be more successful than firmswhich do not select the dominant design. Wetested Hypothesis 1 by measuring the relationshipof entry choice and design strategy with hazardrate and market share for the full sample of firms(see Tables 1, 2 and 3). As reported in Table 1,Model 1, firms that selected the Intel microproc-essor at entry did not have a significant improve-ment in their hazard rates when contrasted tothose firms that did not enter with the Intelmicroprocessor. Therefore, entry choice of thedominant design was not related to survival.When the four possible design strategies wereexamined in Table 2, Model 1, design strategies(1) and (2) showed a significant improvementover the base case of never selecting the Intelmicroprocessor. When a firm entered with theIntel microprocessor and did not switch [(1)


Intel–No Change], their hazard rate wasimproved 48.2 percent (1− Exp(b); or 1− 0.518,Model 2) over a firm which never selected theIntel microprocessor. A firm switching from analternative design to the Intel-based design [(2)Other Design–Change] improved its hazardrate 71.9 percent over the base case. In contrast,the hazard rate for firms that switched away fromthe Intel-based design [(3)Intel–Change] wasnot different from those that never selected theIntel microprocessor. Thus, there was evidence tosupport Hypothesis 1, but with the one caveatthat the survival rate improvements wereassociated with ending up with the dominantdesign (design strategies (1) and (2)), either byselecting the dominant design at entry or laterswitching to the dominant design.

In Table 3, Models 1 and 2 present tests ofHypothesis 1 by examining the relationshipbetween a firm’s design choice and market sharefor the years following the emergence of thedominant design—1984, 1986, 1988, and 1990.Model 1 in Table 3 indicates that entry designchoice was significantly related to market share,but in the opposite direction anticipated. Entrychoice did not have a long-term effect on a firm’smarket share. The relationship between marketshare and entry choice was significant and nega-tive only for 1984. Average price was the onlyconsistent predictor of market share other thanentry choice. Results reported in Table 3, Model2, show that (2)Other Design-Change wasthe only strategy associated with higher marketshare relative to the base case in 1984 and 1986.In contrast, (1)Intel-No Change was the onlystrategy associated with higher market share in1990. Taken together, these results show weaksupport for Hypothesis 1. Entry Choice alone didnot lend support for Hypothesis 1 with marketshare. For Design Strategy, industry evolutionmoderated the relationship between design strat-egy and market share.

Results show that it was more important forfirms to end up with Intel rather than to haveselected it at entry. Overall, we found that choos-ing Intel at entry was not related to success. Infact, Intel as an entry choice was negativelyrelated to market share. The strategies of either(a) entering and staying with Intel, or (b) switch-ing to Intel after entry both increased survival.Though the results were weaker, both strategieswere also positively related to market share for


Table 1. Cox proportional hazard regression: Entry Choice

Model 3:Model 2: Era of Incremental

Model 1: Era of Ferment sample Change sampleFull sample of firms [entered 1975–81] [entered 1982–88]

[entered 1975–88] A test of Hypothesis A test of HypothesisA test of Hypothesis 1 2a—entry choice 3a—entry choice

b Exp(b) b Exp(b) b Exp(b)

Number of Rivals at Entry −0.0166 0.985 0.0134 1.014 −0.0189 0.981Industry Size at Entry −2.6× 10−8 1.000 4.4× 10−7 1.000 5.4× 10−8 1.000Industry Growth Rate at 0.761*** 1.937 0.839*** 2.315 1.017*** 2.765ExitEntry Clock −0.0018 1.017 0.0656 1.068 −0.0426 0.958Entry Clock Squared 6.6× 10−5 1.000 −6.9× 10−4 0.999 2.3× 10−4 1.000Before DD Clock −0.378 0.743 −0.0752 0.928After DD Clock 0.537 1.614 0.554 1.740

Entry Choice†

Entered with Intel MP −0.211 1.464 0.202 1.020 −0.363# 0.696

Sample size 463 101 362−2 Log-likelihood 3036.5 589.9 2165.8D(LL) with Entry Choice 1.511 0.006 2.513Overall Chi-square 82.559### 59.513### 67.429###

+p , 0.10; *p , 0.05; **p , 0.01; ***p , 0.001 (two-tailed tests)qp , 0.10; #p , 0.05; ##p , 0.01; ###p , 0.001 (one-tailed tests)†The base case is ‘Entered with Other than Intel MP.’

at least some of the years. We next tested for aninteraction effect between design choice and pre-dominant design entry.

Hypothesis 2a—Entry Choice: When entryoccurs before a dominant design emerges, firmswhich select the dominant design at entry willnot be more successful than firms which do notselect the dominant design at entry. Tables 1 and4 present tests of Hypothesis 2a for hazard rateand market share, respectively, for firms thatentered between 1975 and 1981 during the Eraof Ferment. In support of the hypothesis, EntryChoice was not associated with hazard rate inModel 2 reported in Table 1. Results reported inTable 4, Model 1, also support the hypothesis asearly entry with Intel did not increase a firm’smarket share. In fact, there was evidence to indi-cate that early entry with the Intel microprocessoractually penalized firms in terms of their marketshare. The evidence indicates support for Hypoth-esis 2a. A firm’s entry choice of the dominantdesign was not associated with either survival ormarket share position when firms entered beforeemergence of the dominant design.


Hypothesis 2b—Design Strategy: When entryoccurs before a dominant design emerges, firmsthat end up with the dominant design are moresuccessful than those firms which end up with analternative design. In Tables 2 and 5, categories(1) and (2) are design strategies where firms endup with the dominant design. The design strate-gies of entering with the Intel-based design andnever changing (category 1), and entering withthe alternative design and then switching to theIntel microprocessor (category 2), were associatedwith decreased hazard rates when contrasted withthe other two possible design strategies in Table2, Model 2. Firms which entered with the Intelmicroprocessor and did not switch [(1)Intel–No Change] decreased their hazard rate by 42.1percent (1− 0.579), when contrasted with thosethat never chose the Intel-based design. Firmsthat entered with an alternative design butswitched [(2) Other Design–Change]decreased their equivalently contrasted hazardrates by 78.4 percent (1− 0.216). The analysisin Table 5, Model 1, indicates that design strategywas not associated with a significant increase in


Table 2. Cox proportional hazard regression: Design Strategy

Model 3:Model 2: Era of Incremental

Model 1: Era of Ferment sample Change sampleFull sample of firms [entered 1975–81] [entered 1982–88]

[entered 1975–88] A test of Hypothesis A test of HypothesisA test of Hypothesis 1 2b—design strategy 3b—design strategy

b Exp(b) b Exp(b) b Exp(b)

Number of Rivals at Entry −0.0167 0.983 −0.0148 0.985 −0.0168 0.983Industry Size at Entry −6.1× 10−8 1.000 −1.7× 10−6 1.000 −3.7× 10−8 1.000Industry Growth Rate at 0.665*** 1.944 0.831*** 2.296 0.874*** 2.395ExitEntry Clock −0.000879 1.001 −0.0113 0.989 −0.0347 0.966Entry Clock Squared 6.5× 10−5 1.000 −2.0× 10−5 1.000 2.0× 10−4 1.000Before DD Clock −0.368 0.692 −0.806 0.447After DD Clock 0.553 1.739 0.464 1.591

Design Strategy††

(1) Intel–No Change −0.658### 0.518 −0.547# 0.579 −0.661# 0.516(2) Other Design–Change −1.271### 0.281 −1.533### 0.216 −0.905## 0.405(3) Intel–Change −0.258 0.773 0.210 1.234 −0.577 0.562

Sample size 463 101 362−2 Log-likelihood 3005.9 564.4 2160.0D(LL) with Design Strategy 32.074### 25.501### 8.352#

Overall chi-square 108.288### 80.205### 71.915###

+p , 0.10; *p , 0.05; **p , 0.01; ***p , 0.001 (two-tailed tests)qp , 0.10; #p , 0.05; ##p , 0.01; ###p , 0.001 (one-tailed tests)††The base case is ‘Never Choose the Intel MP.’

market share over the various years, except in1984 (the 1984 model had the only significantF-statistic). In addition, this short-term marketshare advantage was only associated with firmsthat entered with an alternative design and thenswitched (category 2), but not for those thatentered with the Intel microprocessor (category1). Thus, we found support that ending up withthe dominant design was important for survival,but not market share for firms that entered duringthe Era of Ferment.

Hypothesis 3a—Entry Choice: When entryoccurs after a dominant design emerges, firmswhich select the dominant design at entry willbe more successful than firms which select analternative design at entry. In Table 1, Model 3,selecting the Intel microprocessor design at entrywas associated with a decrease in hazard rate (a30.4% reduction when contrasted to firms whichselected an alternative design at entry). Howeverin Table 4, Model 2, entry with the Intel-baseddesign was not associated with increased market


share (except in the last year, 1990). Thus, wefound support for Hypothesis 3a in terms ofsurvival but not market share.

Hypothesis 3b—Design Strategy: When entryoccurs after a dominant design emerges, firmswhich select the dominant design upon entry andnever use an alternative design will be moresuccessful than those firms which do not alwaysuse the dominant design. For the hypothesis tobe supported, the (1)Intel–No Change strategyshould have been the only design strategy to havehad a significantly lower hazard rate comparedto the base group,Other Design–No Change(never chose the Intel MP). Hazard modelsreported in Table 2, Model 3, do not supportthe hypothesis because both the (1)Intel–NoChange and (2)Other Design–Change strate-gies significantly reduced firms’ hazard rate.While not reported here, further analysis revealedno significant difference between these two cate-gories when (1)Intel–No Change was used asthe base category. Model 2 in Table 5 indicates

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Table 3. Linear regressions of ln(Annual Market Share)

Full sample of firms [entered 1975–88]A test of Hypothesis 1

Model 1: Entry Choice Model 2: Design Strategy

Year: 1984 1986 1988 1990 1984 1986 1988 1990

Constant −12.431 17.842 −9.450 −2.082 −13.726 9.925 −9.936 −3.624Number of Rivals at Entry 0.0518 −0.0785 −0.0206 −0.0179 0.0342 −0.0552 −0.0253 −0.0174Industry Size at Entry −2.5× 10−7 −5.2× 10−7 6.8× 10−8 −1.1× 10−8 2.2× 10−6 −6.3× 10−10 8.3× 10−8 3.1× 10−8

Entry Clock 0.0824 −0.238 0.149+ 0.0201 0.119 −0.156 0.152+ 0.0306Entry Clock Squared −2.8× 10−4 1.0× 10−3 −5.6× 10−4 −4.8× 10−5 6.0× 10−4 6.5× 10−4 −5.6× 10−4 −8.2× 10−5

Before DD Clock 1.519 −2.432 1.108 0.485 1.562 −1.528 1.112 0.599After DD Clock −0.909 3.680 0.371 0.389 −5.785 1.973 0.458 0.330Average Price −0.0757*** −0.0647*** −0.0862*** −0.143*** −0.0693 −0.0547*** −0.0787*** −0.142***

Entry Choice†

Entered with Intel MP −0.966# −0.367 −0.386 0.550Design Strategy††

(1) Intel–No Change −0.586 0.478 0.192 1.162q

(2) Other Design–Change 1.320## 1.765## 0.459 0.984(3) Intel–Change −0.810 −0.975 −2.626q —

Sample size 119 162 201 179 119 162 201 179R2 20.4% 15.5% 18.9% 22.1% 24.5% 20.8% 19.8% 22.7%F-statistic 3.522### 3.501### 5.586### 6.036### 3.500### 3.974### 4.684### 5.521###

+p , 0.10; *p , 0.05; **p , 0.01; ***p , 0.001 (two-tailed tests)qp , 0.10; #p , 0.05; ##p , 0.01; ###p , 0.001 (one-tailed tests)†The base case is ‘Entered with Other than Intel MP.’††The base case is ‘Never Choose the Intel MP.’

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Table 4. Linear regressions of ln(Annual Market Share): Entry Choice

Model 1: Model 2:Era of Ferment sample [entered 1975–81] Era of Incremental Change sample [entered 1982–88]

A test of Hypothesis 2a—entry choice A test of Hypothesis 3a—entry choice

Year: 1984 1986 1988 1990 1984 1986 1988 1990

Constant 2.750 32.367 11.244 28.416 −32.547 −19.787 −11.469 −4.905Number of Rivals at Entry −0.0917 −0.151 −0.192 −0.195 — 0.0753 −0.0168 −0.00457Industry Size at Entry −8.6× 10−6 −6.6× 10−6 −4.0× 10−6 −1.5× 10−5 — 2.4× 10−6 −2.4× 10−8 1.9× 10−8

Entry Clock −0.0883 −0.374 −0.0546 −0.415 0.646 0.143 0.176 0.0402Entry Clock Squared 1.9× 10−3 1.9× 10−3 1.2× 10−3 4.1× 10−3 −3.5× 10−3 −5.8× 10−4 −6.6× 10−4 −8.5× 10−5

Before DD Clock −0.458 −4.405 −1.720 −3.359After DD Clock −0.627 −7.765 0.197 −0.278Average Price −0.153*** −0.106 −0.0748 −0.198+ −0.0410# −0.0562** −0.0902*** −0.139***

Entry Choice†

Entered with Intel MP −1.486## −1.617q −1.929q 0.768 0.148 0.408 0.172 0.777+

Sample size 65 40 27 21 54 122 174 158R2 31.6% 25.8% 32.7% 40.4% 21.6% 12.8% 12.4% 14.3%F-statistic 5.232### 1.588 1.317 1.260 2.652# 2.397# 3.362## 3.563###

+p , 0.10; *p , 0.05; **p , 0.01; ***p , 0.001 (two-tailed tests)qp , 0.10; #p , 0.05; ##p , 0.01; ###p , 0.001 (one-tailed tests)†The base case is ‘Entered with Other than Intel MP.’

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Table 5. Linear regressions of ln(Annual Market Share): Design Strategy

Model 1: Model 2:Era of Ferment sample [entered 1975–81] Era of Incremental Change sample [entered 1982–88]A test of Hypothesis 2b—design strategy A test of Hypothesis 3b—design strategy

Year: 1984 1986 1988 1990 1984 1986 1988 1990

Constant 0.178 22.602 19.800 20.810 −52.665 −0.0265 −13.170 −4.999Number of Rivals at Entry −0.0833 −0.165 −0.209 −0.198 — 0.0104 −0.0248 −0.00691Industry Size at Entry −5.0× 10−6 5.8× 10−6 −3.9× 10−6 −1.4× 10−5 — 7.0× 10−7 −2.1× 10−8 4.2× 10−8

Entry Clock −0.0340 −0.196 −0.163 −0.318 1.131 −0.0660 0.195 0.0366Entry Clock Squared 1.2× 10−3 5.5× 10−4 1.7× 10−3 3.7× 10−3 −6.0× 10−3 3.0× 10−4 −7.3× 10−4 −8.2× 10−5

Before DD Clock −0.210 −3.348 −2.728 −2.483After DD Clock −0.749 −1.259 0.454 −0.166Average Price −0.162*** −0.105 −0.0689 −0.203+ −0.0333* −0.0438* −0.0702* −0.135***

Design Strategy††

(1) Intel–No Change −1.071q −0.511 −2.538 1.899 0.541 1.216# 1.312q 1.216(3) Other Design–Change 0.968q 1.415 −0.973 1.117 1.753# 2.129## 1.360 0.871(4) Intel–Change −1.376 −2.965 — — — 0.0817 1.622 —

Sample size 65 40 27 21 54 122 174 158R2 40.2% 30.0% 30.7% 42.6% 29.8% 17.3% 14.6% 14.3%F-statistic 4.102### 1.430 0.998 1.112 3.326# 2.594# 3.112## 3.117##

+p , 0.10; *p , 0.05; **p , 0.01; ***p , 0.001 (two-tailed tests)qp , 0.10; #p , 0.05; ##p , 0.01; ###p , 0.001 (one-tailed tests)††The base case is ‘Never Chose the Intel MP.’

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similar results in that firms which ended up withthe Intel-based design had higher market sharesthan those that ended up with another design. Inother words, it did not seem to matter if the firmentered with the Intel microprocessor design ornot, as long as they ended up with the dominantdesign. We therefore did not find support forHypothesis 3b—Design Strategy because successwas also higher for firms that entered with analternative design, but then switched to the Intel-based design.

DISCUSSION AND CONCLUSIONS

In response to the key questions presented earlier,we found the following. First, choosing the domi-nant design at entry was important for survivalof firms that entered after the dominant designemerged and became a known decision factor topotential entrants, but not before. Second, a firmwas not doomed from the start if they initiallyselected a design that did not become dominant.We found that firms improved both their chancesof survival and market share position when theyswitched to the dominant design, regardless ofwhether a firm entered before or after the domi-nant design emerged. Finally, we also found thatsurvival and market share were not always com-mensurate indicators of success when controllingfor pre- and post-dominant design entry. Whenentry was during the era of ferment (before thedominant design emerged), ending up with thedominant design (either choosing the dominantdesign at entry or switching to the dominantdesign) improved survival but not market share.In contrast, firms that entered during the era ofincremental change (entry after the dominantdesign emerged) showed improvement for both.

The weak design strategy and market shareresults for early entrants (Era of Ferment) needto be investigated further. While we do notinclude this in our study, our analysis found thattiming of when a firm selected the dominantdesign mattered for early entry firms.6 Another

6 In response to a referee’s comments, we investigated thesignificance of the timing of when a firm selected the domi-nant design. For the sample of firms that eventually selectedthe Intel microprocessor, the timing of this selection onlymattered for firms that entered prior to when the dominantdesign emerged. For both market share and survival, the laterthese early entrants selected the dominant design, the higher


avenue of exploration is to investigate the degreeto which firms commit their resources to supportthe dominant design when they switch. Uniquepersonal computer designs offered by early entryfirms required them to also invest in co-specialized assets (like software). Investments inco-specialized assets make early design decisionsdifficult to reverse. Even though it is generallyprescribed that firms minimize their initial invest-ments in co-specialized assets during the Era ofFerment (Abernathy and Utterback, 1978; Teece,1986), it may be a requirement to make suchinvestments in order to offer a product. For earlydesign choice, lock-in occurs when firms capturea sizable market with their first (and oftenunique) design. Because the product represents asizable investment, customers may be locked into their first design choice and require additionalsoftware, service, and maintenance in order todepreciate their investment for some time afterthe dominant design emerges. As a result of highsunk costs and high customer switching costs,firms may be reluctant to commit 100 percent oftheir design investment in the dominant design.As a consequence, we would expect that a dividedcommitment (or offering both designs) will bedetrimental to a firm’s market share position.

These results must be viewed with caution fortwo reasons: (1) we measured actual switchingand not the desire to switch; and (2) the abilityto switch may have been a function of survivingcompetition long enough to be able to switch.Still, our results indicate that a firm that enterswith a design other than the eventual dominantdesign is not doomed from the start, and canimprove its situation by switching. Our study alsodemonstrates that dominant design choice is animportant predictor of firm success. It is areminder to strategists that when product tech-nology can be imitated, choosing the dominantdesign and creating competitive advantages fromspecific assets—resources, customers, suppliers,learning curve advantages, experience, andspecialized know-how—is important.

While the personal computer industry may haveunique characteristics, the impact of these charac-teristics in terms of the robustness of findings

their market share and the greater their survival rates. Forthe sample of firms which entered after the dominant design,the timing of when they selected the Intel microprocessorwas not a significant predictor of market share or survival.


hinges upon similar studies being performed onother industries. Future studies may also need toexamine differences among firms’ abilities toswitch which may modify the importance ofchoosing the dominant design.

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APPENDIX 1A: Cox Proportional Hazard RegressionControl variables only: Full sample (n = 463)

Model 1 Model 2 Model 3 Model 4 Model 5 Model 6 Model 7 Model 8 Model 9

Number of Rivals at Entry −0.0167 0.0012+

Industry Size at Entry −4.8× 10−8 3.1× 10−8

Ind. Growth Rate at Exit 0.763*** 0.520***Entry Clock −0.0032 0.0039* 0.0137+

Entry Clock Squared 7.8× 10−5 −5.2× 10−5

Before DD Clock −0.380 −0.106* −0.108*After DD Clock 0.520 0.0383 −0.0034

−2 Log (L) 3038.0 3094.4 3095.2 3066.4 3091.9 3090.0 3089.9 3095.6 3089.9Model x2 80.925### 2.703q 1.899 54.293### 5.006# 7.040# 6.481# 1.460 6.484#

+p , 0.10; *p , 0.05; **p , 0.01; ***p , 0.001 (two-tailed tests)qp , 0.10; #p , 0.05; ##p , 0.01; ###p , 0.001 (one-tailed tests)

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APPENDIX 1B: Cox Proportional Hazard RegressionControl variables only: Era of Ferment sample (n = 101)

Model 1 Model 2 Model 3 Model 4 Model 5 Model 6 Model 7

Number of Rivals at Entry 0.0140 0.0106*Industry Size at Entry 4.6× 10−7 −9.7× 10−7 +

Industry Growth Rate at Exit 0.840*** 0.666***Entry Clock 0.0669 0.0124* 0.0449+

Entry Clock Squared −7.1× 10−4 −3.2× 10−4

Before DD Clock −0.0649 −0.153*

−2 Log(L) 589.88 628.25 630.07 605.12 627.38 625.79 627.24Model x2 59.494### 4.413# 2.749q 48.610### 5.124# 5.877q 5.220#


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APPENDIX 1C: Cox Proportional Hazard RegressionControl variables only: Era of Incremental Change sample (n = 362)

Model 1 Model 2 Model 3 Model 4 Model 5 Model 6 Model 7

Number of Rivals at Entry −0.0174 −0.00384Industry Size at Entry −4.2× 10−8 −1.7× 10−8

Industry Growth Rate at Exit 1.062*** 0.969***Entry Clock −0.0559 −0.000367 −0.0436Entry Clock Squared −2.8× 10−4 −1.7× 10−4

Before DD Clock 0.468 −0.0135

−2 Log(L) 2168.4 2195.9 2195.8 2173.1 2196.0 2194.6 2195.9Model x2 64.281### 0.122 0.251 56.924### 0.012 1.416 0.109


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APPENDIX 2A: Correlation TableMarket share 1984: Full sample (n = 119)

Mean ln (1) No. (2) Ind. (3) Entry (4) Entry (5) Before (6) After (7) Ave. (8) EntryS.D. (Mkt Shr) Rivals Size Clock Clock2 DD DD Price Choice

In(Annual Market Share) −3.541 1.0002.452

(1) Number of Rivals at Entry 69.47 −0.183* 1.00038.99

(2) Industry Size at Entry 1 061 353 −0.162+ 0.850*** 1.0001 232 240

(3) Entry Clock 73.97 −0.190* 0.965*** 0.740*** 1.00026.76

(4) Entry Clock Squared 6182.3 −0.183* 0.983*** 0.827*** 0.977*** 1.0003430.0

(5) Before DD Clock 1.605 0.183* −0.938*** −0.641*** −0.981*** −0.932*** 1.0002.005

(6) After DD Clock 0.269 −0.148 0.727*** 0.977*** 0.605*** 0.700*** −0.488*** 1.0000.445

(7) Average Price 8.252 −0.372*** 0.125 0.179+ 0.125 0.155+ −0.075 0.190* 1.00011.791

(8) Entry Choice† 0.378 −0.235** 0.255** 0.278** 0.215* 0.223** −0.202* 0.270** 0.078 1.0000.487

(9) Design Strategy†† 0.345 −0.233* 0.287** 0.296*** 0.242** 0.249** −0.237** 0.278** 0.063 0.893***(a) Intel–No Change 0.477(b) Other Design–Change 0.219 0.320*** −0.178+ −0.161+ −0.166+ −0.162+ 0.166+ −0.137 −0.135 −0.245**

0.415(c) Intel–Change 0.008 −0.010 −0.146 −0.079 −0.152+ −0.142 0.157+ −0.056 −0.021 0.118

0.092(d) Other Design–No Change 0.429 −0.041 −0.100 −0.136 −0.066 −0.078 0.061 −0.142 0.056 −0.675***

0.497

+p , 0.10; *p , 0.05; **p , 0.01; ***p , 0.001 (two-tailed tests)†The base case is ‘Entered with Other than Intel MP.’††Each of the four cases is reported here using indicator variables.

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APPENDIX 2B: Correlation TableMarket share 1986: Full sample (n = 162)



(1) Number of Rivals at Entry 123.2 −0.245** 1.00059.9

(2) Industry Size at Entry 3 726 081 −0.196* 0.953*** 1.0002 709 822

(3) Entry Clock 98.25 −0.252** 0.956*** 0.883*** 1.00029.54

(4) Entry Clock Squared 10520.7 −0.239** 0.984*** 0.945*** 0.978*** 1.0004850.2

(5) Before DD Clock 0.741 0.236** −0.776*** −0.629*** −0.904*** −0.801*** 1.0001.594

(6) After DD Clock 1.475 −0.197* 0.944*** 0.988*** 0.843*** 0.922*** −0.553*** 1.0001.247

(7) Average Price 5.221 −0.235** −0.094 −0.103 −0.067 −0.087 0.020 −0.110 1.0009.028

(8) Entry Choice† 0.698 −0.154* 0.608*** 0.624*** 0.593*** 0.602*** −0.488*** 0.598*** −0.138* 1.0000.461

(9) Design Strategy†† 0.667 −0.143+ 0.630*** 0.647*** 0.616** 0.625*** −0.511*** 0.618*** −0.177* 0.931***(a) Intel–No Change 0.473(b) Other Design–Change 0.185 0.307*** −0.498*** −0.523*** −0.483*** −0.496*** 0.378*** −0.502*** 0.017 −0.620***

0.390(c) Intel–Change 0.012 −0.115 −0.042 −0.016 −0.086 −0.064 0.124 −0.022 0.239** 0.074

0.111(d) Other Design–No Change 0.136 −0.115 −0.289*** −0.292*** −0.273*** −0.278*** 0.235** −0.282*** 0.146+ −0.602***

0.344


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APPENDIX 2C: Correlation TableMarket share 1988: Full sample (n = 201)



(1) Number of Rivals at Entry 179.9 −0.293*** 1.00077.6

(2) Industry Size at Entry 4 924 554 −0.225** 0.903*** 1.0002 394 979

(3) Entry Clock 118.4 −0.296*** 0.967*** 0.900*** 1.00033.0

(4) Entry Clock Squared 15110.4 −0.292*** 0.989*** 0.896*** 0.976*** 1.0006375.1

(5) Before DD Clock 0.453 0.263*** −0.691*** −0.682*** −0.832*** −0.699*** 1.0001.356

(6) After DD Clock 2.881 −0.260*** 0.977*** 0.889*** 0.907*** 0.966*** −0.541*** 1.0001.788

(7) Average Price 3.599 −0.176* −0.271*** −0.278*** −0.260*** −0.257*** 0.206** −0.264*** 1.0006.709

(8) Entry Choice† 0.811 −0.175* 0.644*** 0.677*** 0.661*** 0.630*** −0.580*** 0.602*** −0.366*** 1.0000.393

(9) Design Strategy†† 0.791 −0.149* 0.651*** 0.687*** 0.662*** 0.636*** −0.570*** 0.611*** −0.349*** 0.939***(a) Intel–No Change 0.408(b) Other Design–Change 0.159 0.187** −0.560*** −0.635*** −0.574*** −0.552*** 0.478*** −0.535*** 0.145* −0.797**

0.367(c) Intel–Change 0.005 −0.084 −0.036 −0.016 −0.010 −0.024 −0.024 −0.035 0.023 0.034

0.071(d) Other Design–No Change 0.045 −0.009 −0.276*** −0.232*** −0.283*** −0.265*** 0.283*** −0.242*** 0.422*** −0.448***

0.207


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APPENDIX 2D: Correlation TableMarket share 1990: Full sample (n = 179)


ln(Annual Market Share) −2.530 1.0002.029

(1) Number of Rivals at Entry 200.7 −0.301*** 1.00086.41

(2) Industry Size at Entry 5 421 928 −0.269*** 0.930*** 1.0002 550 507

(3) Entry Clock 125.1 −0.316*** 0.970*** 0.925*** 1.00034.8

(4) Entry Clock Squared 16838.7 −0.297** 0.990*** 0.923*** 0.976*** 1.0007189.3

(5) Before DD Clock 0.397 0.294*** −0.653*** −0.654*** −0.796*** −0.652*** 1.0001.283

(6) After DD Clock 3.391 −0.269*** 0.984*** 0.920*** 0.924*** 0.975*** −0.521*** 1.0002.026

(7) Average Price 3.318 −0.233** −0.186* −0.204** −0.226** −0.188* 0.273*** −0.156* 1.0004.636

(8) Entry Choice† 0.832 −0.145+ 0.639*** 0.673*** 0.676*** 0.620*** −0.633*** 0.590*** −0.265*** 1.0000.375

(9) Design Strategy†† 0.821 −0.146+ 0.631*** 0.675*** 0.666*** 0.614*** −0.608*** 0.588*** −0.250*** 0.962***(a) Intel–No Change 0.384(b) Other Design–Change 0.134 0.171* −0.557*** −0.630*** −0.576*** −0.546*** 0.468*** −0.539*** 0.167* −0.789***

0.342(c) Intel–Change 0 — — — — — — — — —

0(d) Other Design–No Change 0.045 −0.012 −0.251*** −0.213** −0.285*** −0.239** 0.356*** −0.202** 0.189* −0.482***

0.207


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Documents

Doomed from the start: what is the value of selecting a future dominant design?