The Evolution of Strategic Emerging Industry: The Earlier Stage and the Shake-Out Phenomenon

The industrial landscape is becoming increasingly complex and dynamic, with innovative technologies stimulating the emergence of new industries. Literatures searching life cycle always describe a smooth pattern of emergence over time in which the number of firms in an industry increases, hits a peak, decreases as a result of a shakeout, and then stabilizes as the industry reaches maturity. When these findings applied to the strategic emerging industry the life cycle curve need modified according the industries\´ characteristics. This paper introduces an alternative pattern of evolution of strategic emerging industries in the earlier stage. Two phases are added in the process and the time axis extended into five phases. During the earlier stage, an industry experiences a sharp decrease in the number of firms - a "mini shakeout" - before increasing again, reaching a final peak and undergoing a major shakeout as described in the extant literature. We then propose a conceptual model that highlights the role of unexpected factors, the internal factors and strategic importance of the emerging industry to the firm in determining its likelihood of exit from the industry.