Strategic Management Journal, September 2017
Abstract: New industries are typically characterized by a period of emergence, shakeout and maturity. Prior explanations of firm exit during industry shakeout focus on either the role of choosing the technology that becomes the dominant design or of entrant’s pre-entry capabilities. In this paper we bring together these disparate explanations and explore their joint effect on firm survival to create a more complete picture of industry evolution. We also consider distinct exit pathways, namely dissolution, which results in the death of the firm and its capabilities, and acquisition, which results in the termination of the firm but in the redeployment of its capabilities. Finally in a series of post-hoc analysis we explore the impact of related pre-entry capabilities and postentry strategy change. The context for the study is the solar photovoltaic industry from 1978- 2015. We find that technology choice and pre-entry capabilities are strong predictors of survival, acting jointly as complements to increase survival or independently as buffers against failure. Furthermore, many firms that exit are not dissolved, and diversifying entrants that enter with the dominant design technology are least likely to exit via dissolution. Overall, the findings from the study unpack the different facets of firms and their strategies, providing a more multi-faceted picture of firm survival in new industries.