The performance consequences of subfield entry

The emergence of technical subfields is a common phenomenon in dynamic as well as relatively stable industries. The proper strategic response to the emergence of a subfield, that is, the decision on whether to enter or not to enter, is a key determinant of future firm performance. We propose that this entry decision is not a simple one. The effects of subfield entry may be influenced by strategic factors related to the subfield as well as to the greater industry environment. In this study, we apply a population ecology framework to the study of subfield birth and evolution and use this perspective to develop and test several propositions related to the effects of subfield entry on performance. The data pertain to the evolution of the automatic teller machine subfield over the first 9 years of its existence for a population of over 3500 banks. Our results support the population ecology framework, generally emphasizing the positive performance consequences of early subfield entry.