Firm Survival and Industry Evolution in Vertically Related Populations

Abstract

This paper examines how the density and governance of vertically related populations affect the life chances of organizations. We integrate the literatures on organizational ecology and vertical integration to develop a theory of how 1) specialized upstream industries affect downstream survival rates 2) the prevalence of different governance forms among upstream and downstream organizations moderates this relationship, and 3) different forms of governance exert differential competitive pressures on focal organizations. We find evidence supporting our hypotheses in an empirical examination of the downstream laser printer industry and upstream laser engine industry.

Keywords: industry evolution, vertical relationship, vertical integration, density dependence, laser printer industry

JEL Classification: L22, L63, D23, O32