The Evolution of Intraindustry Firm Heterogeneity: Insights From a Process Study

Abstract

In this study, we propose a process framework for understanding the evolution of intraindustry firm heterogeneity, drawing on a longitudinal study of the development of the cellular telephone service business in seven “Baby Bells.” The framework depicts market, competitive, and organizational forces whose dynamic interplay shapes a process in which diversity among firms within an industry is created, magnified, and sustained. It elucidates path dependence in firm evolution and highlights possible roles for management in affecting that path.