THE PERFORMANCE CONSEQUENCES OF SUBFIELD ENTRY

The emergence of technical subfields is a common phenomenon in dynamic as well as relatively stable industries. The proper strategic respons e to the emergence of a subfield, that is, the decision on whether to enter or not to enter, is a key determinant of future firm performance . We propose that this entry decision is not a simple one. The effects of subfield entry may be influenced by strategic factors related to t he subfield as well as to the greater industry environment. In this st udy, we apply a population ecology framework to the study of subfield birth and evolution and use this perspective to develop and test sever al propositions related to the effects of subfield entry on performanc e. The data pertain to the evolution of the automatic teller machine s ubfield over the first 9 years of its existence for a population of ov er 3500 banks. Our results support the population ecology framework, g enerally emphasizing the positive performance consequences of early su bfield entry. (C) 1997 by John Wiley & Sons, Ltd.