The effect of population-level learning on market entry: The American automobile industry

Is starting a new business more difficult in an emerging industry or in a m ature industry? The density dependent model of organizational ecology maint ains that the industry's age is irrelevant; the number of firms currently o ccupying the market niche determines the industry's competitive structure. Nevertheless, population-level learning predicts historical asymmetry in en try barriers. Over time, the average fitness of the surviving population me mbers increases, making market entry more difficult. At the same time, surv iving organizations become increasingly spread out across the resource spac e, providing niches that new firms can exploit. Thus, industry-level evolut ion systematically alters the environment that both existing organizations and new firms face. I offer a new specification for the founding rate model that synthesizes ecological and evolutionary perspectives. Tests of this m odel in the American automobile industry support its merit. (C) 2000 Academ ic Press.