How Friends Become Foes: The Origins of Market Entry of Complementors in New Technology Generations

While previous management studies suggest that product complementarity may provide an important mechanism in firms' market entry behaviors, we still do not know whether this relationship may hold in industries characterized by discontinuous technological generations. In this study, we suggest that changes in technological generations are a critical source of misalignment among complementary firms by focusing on the entry decisions of complementary firms. Using a unique dataset drawn from the computer printer industry, we found that firms in a specific product complementary market, vis-à-vis a generic market, have a higher likelihood of market entry into the focal industry characterized by multiple discontinuous technological generations. More importantly, the empirical analyses suggest that acquiring recombinant capabilities facilitates market entry by allowing the firm to utilize the relevant knowledge associated with complementarity. In addition, we show evidence that entrepreneurial start-ups are quicker than diversifiers in new market entry, suggesting the importance of entrant types in market entry.