Do laterally diversifying firms outlast new startups? Or does organizational inertia give the advantage to startups? We explore these questions here using the experiences of American automobile manufacturers from 1885 through 1981. We advance and test an integrative model that allows the organizational effects of entry mode to vary across the firm’s life cycle. We also compare the life chances of laterally diversifying firms by industry of origin, including especially bicycle, carriage and engine manufacturers. Findings show the potentially integrative value of an evolutionary approach to strategy.
Reprinted in Audretsch, David B., and Steven Klepper, (eds.) Innovation, Evolution of Industry and Economic Growth. Edward Elgar Publishing Limited, United Kingdom, 1999.