Industry shakeouts and product line strategies: The case of US laser printer industry

Abstract

Many industries experience a shakeout, which is a short period of time during which the number of firms drops significantly after an initial increase in the number of firms. Shakeouts cause a change in the market structure and thus an accompanying change in firms’ market strategies. Although researchers have examined the cause of shakeouts and the firm capabilities that may explain firm survival against the resultant changes, we have little understanding of how firms’ product strategies differ owing to market structure changes. In this paper, we explore differences in firms’ product strategies (i.e., product quality improvement, product line management, and product market strategy) before and after shakeouts. In analyzing a sample of US laser printer manufacturers and their products for the period between 1983 and 2002, we find clear differences in firms’ product exit decisions before and after shakeouts. With these findings, our study may contribute to the understanding of the link between industry shakeouts and firms’ product strategies.