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Evolution and Firm Survival in Vertically Related Populations: The Case of the German Piano Industry

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Stuerz,  Roland
MPI for Innovation and Competition, Max Planck Society;

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Citation

Stuerz, R. (2014). Evolution and Firm Survival in Vertically Related Populations: The Case of the German Piano Industry. Max Planck Institute for Innovation and Competition Research Paper, No. 14-04.


Cite as: http://hdl.handle.net/11858/00-001M-0000-001A-2BAA-9
Abstract
Research on the evolution of industries has devoted little attention to the development of vertical structures of firms and the emergence of new, specialized supplier populations along the value chain of an industry as industries mature. The change of the vertical industry structure and the co-evolution of subpopulations of suppliers lead to the creation of an interdependent community of organizational populations. However, the impact of vertically related upstream suppliers on the survival of downstream end product manufacturers remains under-researched. This study addresses this research gap and explores the impact of upstream suppliers on downstream survival of all German piano manufacturers (1705-1929). Quantitative event history analyses show that the number of suppliers of the most important core components exhibits a positive effect on firm survival of piano manufacturers. However, the number of firms in other supplier subpopulations does not always affect the exit rates of quality and non-quality end product manufacturers in the same way, which is probably related to the different degree of vertical integration of these two types of firms. The study contributes to the understanding of the forces driving industry evolution and firm survival and makes it easier to predict long-term industrial developments.