Competition, product line length, and firm survival

Abstract

Adjusting product line length is one of the major strategies that firms employ to sustain their market position in competitive environments. This study extends existing studies on product line strategies by adding empirical results on both the relationship between competitive intensity and product line length and the performance of firms following the suggested product line strategy. The analysis of data on 1,849 printer products introduced by 342 manufacturers from 1983 to 2002 shows an inverted U-shaped relationship between competitive intensity and product line length, and that firms following such a strategy have a significantly higher survival rate in the market. Our findings might shed light on conflicting theoretical viewpoints on and empirical examinations of the relationship between product line strategies and firm performance.