This paper explicates the key mechanisms and research themes of industry life-cycle theory and assesses the extent to which empirical evidence supports such an approach. It is based on a review of 216 industry life-cycle studies. The review of the theory is organized around industry emergence and transition to industry maturity. The key research themes concern changes in industry structure, changes in the nature of innovation, and the determinants of survival. Three potential special cases, i.e. services, complex products and systems, and cultural industries, are identified, and five research questions for future enquiry are presented.
IntroductionThe search for regularities in the aging patterns of different industries has inspired the development of industry life-cycle (ILC) theory. The theory aims to explain changes in technological development and industry structure over the period that the industry ages. This stream of research began as the study of the American car manufacturing industry (Abernathy 1978;Abernathy and Clark 1985;Abernathy and Utterback 1978). It has become an established theory appearing in academic research, business school curricula and management consulting. There has been a constant stream of ILC studies exploring the theory's propositions in different industries and countries, and seeking more detailed explanations on various life-cycle phases. It is now a good time to take stock of the key research themes, examine the types of data used to build them, and summarize the empirical findings. This allows the research gaps and future research directions to be identified. The present paper aims to draw together current knowledge on ILC and thereby explore gaps for further enquiry. This is performed by reviewing the literature in order to (1) explicate the mechanisms that produce the life-cycle pattern, (2) summarize the key research themes, (3) assess empirical work relating to the themes and (4) identify research gaps to be addressed by future research.The starting point for the review was the identification of early and influential ILC papers. This was carried out through searches in ISI Web of Knowledge using the terms 'industry life cycle', 'product life cycle' and modifications thereof. Articles deemed to be early and influential life-cycle papers were those that (1) were cited more than 100 times, (2) were published prior to 2000, (3) were linked to Abernathy, Utterback and Klepper's work, and (4) used entries and exits as central variables. Citing Abernathy, Utterback or Klepper was used as a qualifier because their work is central to the literature in question, and they appear relatively early in the development of the theory. This resulted in a list of seven papers (Anderson and Tushman 1990; These articles were used to track the citing paths forwards and backwards in order to arrive at a comprehensive Acknowledgements: The author wishes to thank Mikko Jääskeläinen, Pasi Kuusela, Juha-Antti Lamberg and three anonymous reviewers for helpful discussions and comments on previous versio...