The Moderating Role of Submarket Dynamics on the Product Customization–Firm Survival Relationship

Ajay Bhaskarabhatla ()
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Ajay Bhaskarabhatla: Erasmus University Rotterdam, 3000 DR Rotterdam, Netherlands

Organization Science, 2016, vol. 27, issue 4, 1049-1064

Abstract: In this paper, we examine how the provision of product customization services affects firm survival. Integrating literatures on industry evolution, product-related adapting services, and entry deterrence, we hypothesize that the relationship between product customization—the costly modification of a product to cater to customer needs—and firm survival differs across industries, based on the extent of submarkets. We argue that in industries that feature submarkets more prominently, the positive association between product customization and firm survival is stronger for two conceptually distinct and empirically distinguishable mechanisms: customizing firms enter new submarkets and also deter potential entry. We conclude that offering product customization services has strategic benefits that sometimes outweigh the cost of coordinating with customers.

Keywords: competitive strategy; strategy and policy; longitudinal research design; industrial organization; evolutionary approaches; product design; technology and innovation management (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ororsc:v:27:y:2016:i:4:p:1049-1064

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