We examine the entries of firms into the automobile manufacturing industry in Europe from 1886 through 1981. We replicate and compare estimates of the basic model of density-dependent legitimation and competition for Belgium, Britain, France, Germany, and Italy. The predictions of the model hold for each country. We also seek to clarify processes of legitimation and competition by considering multiple levels of analysis and links between countries. Our main hypothesis is that legitimation operates more broadly than competition. In particular, legitimation is driven by the density of all European automobile producers, while competition is determined by a country’s own density of producers. This hypothesis is supported for the four continental countries but not for Britain.
Reprinted in W.H. Starbuck (ed.), Organizational Learning and Knowledge Management. Edward Elgar, 2008.