The battle for survival: Innovating firms' strategic signaling behaviors and their impacts on business success during the shakeout period after the standards war

Abstract

The shakeout period after the emergence of a dominant design is very important to technology followers and niche market producers, who need adjust to significant changes in the competitive landscape. We posit that such innovating firms use strategic signals that address technical-, market-, and standards-uncertainty associated with their innovations to communicate with market participants to reduce participants' perceived uncertainties associated with the innovative products. Studying technology followers and niche market producers in the personal computer industry during its 1982–1989 shakeout period, we found that technology followers and niche market producers differ in their use of technical-, market-, and standards-related signals. Additionally, using event study methodology, we find that technology followers' strategic signals have significant positive impacts on both their own and other followers' stock prices. Meanwhile, niche market producers' strategic signals have significant positive impacts on their own stock prices, but not significant impacts on other niche market producers and technology followers' stock prices.