Athena's Birth: Triggers, Actors, and Actions Preceding Industry Inception

• DOI: http://doi.org/10.1002/sej.1259
• Author: Sonali K. Shah,Mahka Moeen,Rajshree Agarwal
• Date: 01 September 2017
• Published date: 01 September 2017

Athena’s Birth: Triggers, Actors, and Actions

Preceding Industry Inception

Rajshree Agarwal,

1

*Mahka Moeen,

2

and Sonali K. Shah

3

1

Management and Organization, University of Maryland, College Park,

Maryland

2

Strategy & Entrepreneurship, University of North Carolina, Chapel Hill,

North Carolina

3

Strategy & Entrepreneurship Group, Department of Business

Administration, University of Illinois, Champaign, Illinois

Research summary: Industry evolution scholars define industry inception as the first

instance of product commercialization, focusing on subsequent time periods of growth

and maturity. Left understudied are the triggers, actors, and actions preceding industry

inception. We integrate recent research in a preliminary framework, conceptualizing

the incubation stage as activated by a “trigger”event—a scientific discovery, unmet

user need, or mission-oriented grand challenges—and continuing through the first

instances of product commercialization. We focus on illuminating actions of multiple

and heterogeneous actors that help reduce high technological and demand uncertainty,

thereby shaping industry structure and strategic action post-commercialization. To

point, although the actors may be different, their actions follow a similar theme. We

hope this framework spurs future research investigating the understudied incubation

stage of new industries.

Managerial summary: Numerous visionaries––inventors, entrepreneurs, scientists,

users, managers, policy makers, and others––spend decades laying the groundwork that

leads to the creation of new industries. Their contributions are critical, yet have received

little systematic attention. Here, we illuminate their actions during the understudied

“incubation”stage sparked by a trigger event and culminating in the first instance of

product commercialization. We begin by documenting three triggers: scientific and tech-

nological discoveries, unmet user needs, and mission-oriented grand challenges. We

show that following a trigger event, visionaries solve the technological problems

required to transform an innovative idea into a viable commercial product and engage

potential adopters and stakeholders; they do this by both applying their existing knowl-

edge base and engaging in experimentation. Their efforts set the stage for subsequent

commercialization efforts. Copyright © 2017 Strategic Management Society.

A rich literature spanning economics, strategy, mar-

keting, sociology, and science and technology stud-

ies has examined industry evolution, focusing on

how entrepreneurial activity following the first

instance of commercialization reduces technologi-

cal and demand uncertainty, shapes industry struc-

ture, and impacts firm strategy and performance

(Abernathy & Utterback, 1978; Agarwal & Bayus,

2002; Bijker, Hughes, & Pinch, 1987; Gort &

Klepper, 1982; Hannan & Freeman, 1977). In con-

trast to the extensive study of the takeoff and

growth stages, less systematic attention has been

paid to the time period preceding the first product

commercialization, although scholars note indus-

tries incubate over an average duration lasting from

Keywords: entrepreneurship; industry evolution; nascent

industries; innovation; knowledge

*Correspondence to: RajshreeAgarwal, University of Maryland,

4512 Van Munching Hall, College Park, MD20742.

E-mail: rajshree@rhsmith.umd.edu

Authors contributed equally, and last names are listed in

alphabetical order.

Copyright © 2017 Strategic Management Society

Strategic Entrepreneurship Journal

Strat. Entrepreneurship J., 11: 287–305 (2017)

Published online in Wiley Online Library (wileyonlinelibrary.com). DOI: 10.1002/sej.1259

26 to 28 years (Agarwal & Bayus, 2002; Golder,

Shacham, & Mitra, 2009). Recent work has started

to examine the “incubation stage”(Moeen & Agar-

wal, 2017; Shah & Mody, 2014), defined here as

the period between an initial trigger event and the

first instance of product commercialization. Build-

ing on our review of this work, we ask: “What are

the triggers of, and what types of actors and actions

lead to, industry inception?”

Our integrative review of empirical work pro-

vides several insights into the incubation stage.

First, we elaborate on the nature of the initial event

activating the emergence of an industry, showing

that industries can be initiated by several triggers,

including scientific and technological discoveries

(Moeen & Agarwal, 2017), unmet user needs

(Shah & Tripsas, 2007), and mission-oriented grand

challenges (Mowery, 2010). Second, we show each

trigger systematically results in myriad actors

engaging in innovative and entrepreneurial actions,

bringing to bear diverse knowledge bases and

experimental pathways to incubate the industry.

Third, their actions relate to sensemaking and proac-

tive investment in the presence of technological and

demand uncertainty. It appears that although the

triggers and actors may be different, the actions are

similar: these efforts typically center around solving

many technological problems to transform an inno-

vative idea into a viable commercial product, as

well as engaging potential adopters and stake-

holders to gauge demand potential.

These insights set the stage for fruitful avenues

for future research on the entrepreneurial actions

that characterize the incubation stage of industries.

We highlight several questions pertaining to a dee-

per study of this stage, the answers to which should

help us understand how the “pre-life”of an indus-

try may determine the structure, strategy, and per-

formance consequences during its more traditional

life cycle stages post-commercialization.

Research Gap

The Emergence and Growth Stages of the

Industries: A Brief Review

In Greek mythology, Athena, the goddess of intelli-

gence and reason, sprang out of Zeus’forehead

fully grown and in a full set of armor. She soon

evolved to become the patron of city and

civilization, promoting the arts and agriculture and

defending the city from outside enemies. Similarly,

the literature on industry evolution marks the

inception of the new industries at the time of first

commercialization and studies subsequent growth

and evolution due to innovation and entrepreneur-

ship. The generic industry life cycle model docu-

mented across numerous industries illustrates an

early quasi-monopoly period, followed by acceler-

ated market entry of firms during the emergence or

growth stage, sharp decline in the number of firms

during the shakeout stage, and an eventual mature

stage with low levels of firm entry and exit

(Abernathy & Utterback, 1978; Gort & Klepper,

1982; Hannan & Freeman, 1977).

The early quasi-monopoly and growth stages

are particularly relevant for understanding industry

emergence processes. The early quasi-monopoly

stage occurs immediately after the first product

commercialization. This stage is often character-

ized by the narrative of lone inventors such as

Edison or the Wright Brothers toiling away in iso-

lation as they transform their ideas into reality.

Accordingly, most industry evolution models

assume industries emerge from a monopoly on the

innovation process (Gort & Klepper, 1982; Jova-

novic & Macdonald, 1994) or take the innovation

to be a given/exogenous (Rao, 1994; Sine, Have-

man, & Tolbert, 2005).

During the emergence or growth stage of indus-

try evolution, there is a steep rise in the number of

firms. Scholars of economics, organizations, and

technology have extensively examined factors lead-

ing to firm entry during this stage (Agarwal &

Tripsas, 2008). Evolutionary economics scholars

note information sources, accumulated stock of

knowledge, and rates of interfirm knowledge diffu-

sion as key factors influencing firm entry

(Agarwal & Gort, 2001; Gort & Klepper, 1982),

and they link takeoff in firms to takeoff in industry

sales (Agarwal & Bayus, 2002). Science and tech-

nology studies scholars have examined evolution

of technologies through technological design

improvements by social groups (Bijker, 1997;

Bijker et al., 1987; Oudshoorn & Pinch, 2003), and

creation/prototyping of innovative new features by

individual users (Franz, 2000; Kline & Pinch,

1996). Organizational theorists highlight how firm

density is shaped by forces of legitimization and

competition (Aldrich & Fiol, 1994; Hannan &

Freeman, 1977) and note the role of social

288 R. Agarwal, M. Moeen and S. K. Shah

Copyright © 2017 Strategic Management Society Strat. Entrepreneurship J., 11: 287–305 (2017)

DOI: 10.1002/sej.1259