ABSTRACT
Traditional theories about entry of new organizations into sectors claim that the entry process is driven by the existence of supernormal profits in the markets. Entry of new organizations will eventually drive the sector to a steady state equilibrium, by eroding market profits and making less efficient organizations exit from the market. Therefore, entry represents a threat for those organizations
already operating in the markets. Since Bain (1956), the first empirical studies about entry concentrated on the existence and relevance of the above-mentioned barriers impeding the entry of new companies into the market, especially focusing on the relationship between barriers and the presence of supernormal profits in the sector. On the contrary, more recent studies challenged the traditional view of entry, and concentrated on effective rates of entry in different industries and on the relationship between entry and exit of organizations. The results of these studies did not confirm the main assumptions of the traditional model of entry. A primary and remarkable result was that all industries are characterized by a non-negligible rate of entry, even if there are high barriers to entry protecting them. Furthermore, market profitability does not seem to be the primary source of attraction of new entrants (Marsili 2001: 18). In addition, entrants’ ability to erode the market shares of incumbents has not been demonstrated; even in sectors characterized by high entry rates, entry is not followed by a decrease in average profits (Geroski and Jacquemin 1988; Geroski and Schwalbach 1991). Some of the most important and widespread empirical results about entry have been summarized by Geroski (1995). First of all, entry is quite common. However, entry rates are also associated with low levels of market penetration and low survival rates. Entry is not particularly related to profitability and the entry barriers and does not have particularly strong effects on average industry price or cost margins. Finally, one of the most interesting results is that entry is often associated with high rates of innovation and increases in efficiency. This is confirmed by other studies (such as Acs and Audretsch 1990; Geroski 1989a and 1989b) that have reported the existence of a positive correlation between entry and innovation. To these empirical results one may add the more general considerations by Nelson and Winter (1982) who describe the entry of new organizations into markets as a process triggered by the perception of technological opportunities to innovate or imitate. Despite these results, for many years the relationship between entry and innovation – and particularly the role of new innovators – has been neglected. More recently, studies on industrial dynamics gave a renewed interest to the role of new innovators (Malerba and Orsenigo 1999), especially of new entrants in different stages of the lifecycle of an industry. In particular, new entrants have a major role in the early stages of the product lifecycle, when a dominant design has not yet emerged: new firms enter into the market bringing new ideas and product innovations (Agarwal and Gort 1996; Gort and Klepper 1982; Klepper 1996; Utterback 1994). Despite the extensive empirical literature on the entry of new organizations into markets, no comprehensive cross-country and cross-sector comparisons about new innovators have been provided. Some efforts in this direction have been attempted by using patent statistics in order to study technological entry. A broad picture of the phenomenon has been provided by Malerba and Orsenigo (1999), who studied technological entry and exit of organizations in 49 technological fields from 1978 to 1990. Other studies considered technological entry as a measure for the turbulence in technological fields, in order to test the presence
of technological regimes and Schumpeterian patterns of innovation in different fields (Breschi et al. 2000; Malerba and Orsenigo 1995 and 1996). Finally some other studies analysed post-entry behaviour, by focusing on the persistence in the patenting activity (Cefis 2003; Cefis and Orsenigo 2001). The present chapter aims to analyse the technological entry of organizations into sectors, using and consolidating the methodology used by Malerba and Orsenigo (1999). This chapter considers as technological entrants those organizations that patent for the first time in a specific technological field. More specifically, this chapter analyses patterns of technological entry and the characteristics of those organizations which patent for the first time in different sectors and in different countries. The main questions that the chapter intends to answer are the following. Are the patterns of technological entry different across countries and sectors? Do technological entrants manage to be persistent innovators and therefore patent again?
