Title

Big Expansions, Monopoly Markets and the Survival of De Novo Entrants

Publication Type

Conference Paper

Publication Date

10-2009

Abstract

This paper challenges the misconception that high growths automatically enhance the survival of de novo entrants, and cautions managers of de novo new entrants against too aggressive a production increase over a short time frame. Instead of narrowing the gap in production scale with incumbents and galvanizing employees through ambitious target, aggressive expansions in production can subject new entrants to increased survival hazards should demand fall below expectations. Empirical evidence from the intra-European airline industry confirms the significant survival risk incurred by the biggest and most aggressive production expansions. Meanwhile, exploring and continuing production in monopoly markets are shown to significantly reduce the survival odds of de novo new entrants.

Keywords

de novo new entrant, venture growth, survival, demand uncertainty

Discipline

Entrepreneurial and Small Business Operations

Research Areas

Strategy and Organisation

Publication

Strategic Management Society Annual International Conference, Washington DC, 11-14 October 2009

City or Country

Washington, DC, USA

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