The innovator's dilemma: when new technologies cause great firms to fail
The innovator's dilemma: when new technologies cause great firms to fail
Price Versus Production Postponement: Capacity and Competition
Management Science
Commissioned Paper: Capacity Management, Investment, and Hedging: Review and Recent Developments
Manufacturing & Service Operations Management
New Product Introduction: Timing, Design, and Pricing
Manufacturing & Service Operations Management
Dynamic Mixed Duopoly: A Model Motivated by Linux vs. Windows
Management Science
The Strategic Perils of Delayed Differentiation
Management Science
Competition and Diversification Effects in Supply Chains with Supplier Default Risk
Manufacturing & Service Operations Management
Long-Term Contracts Under the Threat of Supplier Default
Manufacturing & Service Operations Management
Optimal Entry Timing in Markets with Social Influence
Management Science
Independence of Capacity Ordering and Financial Subsidies to Risky Suppliers
Manufacturing & Service Operations Management
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We analyze the competitive capacity investment timing decisions of both established firms and start-ups entering new markets, which have a high degree of demand uncertainty. Firms may invest in capacity early (when uncertainty is high) or late (when uncertainty has been resolved), possibly at different costs. Established firms choose an investment timing and capacity level to maximize expected profits, whereas start-ups make those choices to maximize the probability of survival. When a start-up competes against an established firm, we find that when demand uncertainty is high and costs do not decline too severely over time, the start-up takes a leadership role and invests first in capacity, whereas the established firm follows; by contrast, when two established firms compete in an otherwise identical game, both firms invest late. We conclude that the threat of firm failure significantly impacts the dynamics of competition involving start-ups. This paper was accepted by Yossi Aviv, operations management.