Emergence of Industries: A Review and Future Directions

• DOI: http://doi.org/10.1111/ijmr.12057
• Author: Juha Uotila,Markku Maula,Robin Gustafsson,Mikko Jääskeläinen
• Published date: 01 January 2016
• Date: 01 January 2016

International Journal of Management Reviews, Vol. 18, 28–50 (2016)

DOI: 10.1111/ijmr.12057

Emergence of Industries: A Review

and Future Directions

Robin Gustafsson, Mikko J¨

a¨

askel¨

ainen, Markku Maula and Juha Uotila1

Department of Industrial Engineering and Management, School of Science, Aalto University, PO Box15500,

FI-00076 Aalto, Finland, and 1Warwick Business School, The University of Warwick, Coventry CV4 7AL, UK

Corresponding author email: robin.gustafsson@aalto.fi

This paper reviewsthe literature on the emergence of industries and the theoretical and

methodological approaches employed. The analysis reveals that industry emergence

can be depicted as a three-stage process. In the first, initial stage, a disruption to the

existing industrial order triggers the second, the co-evolutionary stage, whichincludes

four sub-processes related to developments in technology, markets, activity networks

and industry identity. The convergence of these sub-processes leads to the third stage,

a growth stage and the birth of a new industry. While these three stages and the four

sub-processes are well covered in the literature, the authors find that there is a lack of

understanding in terms of the transitions between the stages, the interactions and in-

terdependencies between sub-processes and moderating factorsof industry emergence.

Future research can bridge these gaps by exploring the different origins and initial

conditions of industries, the processes and interactions in the earliest stages of industry

emergence, and the role of facilitating and managing industry emergence.This implies a

shift in the researchfocus from the industries that have emergedto the nascent processes

of emergence.

Introduction

The emergence of new industries is a phenomenon

that has attracted considerable research interest re-

cently (e.g. Dobrev and Gotsopoulos 2010; Forbes

and Kirsch 2011; Giarratana 2004; Santos and Eisen-

hardt 2009; Sine and Lee 2009). This is not sur-

prising, given the impact of new industries with

regard to economic development. For instance, the

emergence of the biotechnology and internet-related

industries in recent decades has catalysed signif-

icant economic development similar to that origi-

nating from the emergence of the electric lighting

and automobile industries earlier in history (Help-

man 1998). Accordingly, ‘emerging’ (Auster 1992),

‘embryonic’ (Klepper 1997), ‘nascent’ (Santos and

Eisenhardt 2009), ‘introductory’ (Mazzucato 2002)

and ‘emergence/growth stage’ (Agarwal and Tripsas

2008) industries have started to receive increased re-

search (Forbesand Kirsch 2011; Russo 2003; Spencer

et al. 2005) and policy interest in many countries and

economic regions (Breznitz 2007; Eliasson 2000;

Grossman 1990; Hung and Chu 2006).

At this emergent stage of an industry, the mar-

ket, technology or industry members have not

converged, but rather products, technologies and par-

ticipants in the blurry-bounded industries are con-

tinuously changing (Forbes and Kirsch 2011; Phaal

et al. 2011). Perhaps owing to the complexity of the

setting, no systematic reviews of the literature on in-

dustry emergence have been conducted, and there-

fore individual contributions haveremained scattered.

Recent work by Phaal et al. (2011) and Forbes and

Kirsch (2011) has highlighted the importance of this

phenomenon and taken valuable steps to develop a

more integrated synthesis of the overall process of

industry emergence. Phaal et al. (2011) contribute

by developing a pragmatic roadmapping framework

to guide decision-making at firm and policy levels,

whereas Forbesand Kirsch (2011) contribute by high-

lighting empirical challenges in the analysis of in-

dustry emergence. Although both contributions are

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Emergence of Industries 29

important steps to gaining a better overall understand-

ing of how industries emerge, for the purposes of

charting the current understanding and thereby facil-

itating the research towards an integrative theoretical

framework, a systematic review of the extant litera-

ture on industry emergence is warranted. The objec-

tive, therefore, is to conduct a systematic review of

the literature on the emergence of industries.

The review is structured as follows. First, we out-

line the process that was used in collecting, identi-

fying and analysing the relevant industry emergence

literature. Wethen summarize the current understand-

ing of the industry emergence process, looking at both

the different temporal phases and the sub-processes,

while also examining evidence on the strategies and

activities of individual firms in affecting and coping

with industry emergence as well as the gaps in cur-

rent understanding of industry emergence. This is fol-

lowedby a brief review of the theoretical and method-

ological approaches that researchers have used when

analysing industry emergence. We conclude the re-

view by suggesting directions for future research.

Analytical process

The process of emergence introduces an analytical

challenge to the review, and – as this review will

argue in its conclusions – to the empirical studies of

industry emergence. In essence, as will be discussed

in more detail later, as a process, industry emergence

has no clear-cut boundaries. On the one hand, in the

early stages the relevant activities and processes may

not yet be labelled under any specific industry,owing

to the lack of industry identity that is to emerge only

later in the process. On the other hand, one of the gaps

in current research is the detailed understanding of the

transitions between the different phases of industry

evolution, and therefore it is difficult to pinpoint the

precise point at which a new industry moves from

emergence to the ‘early industry development’ stage

of the industry life cycle (Peltoniemi 2011).

These aspects affect the identification of the core

literature on industry emergence and presented a

challenge to the analytical approach of this review:

how to identify the core literature among the mass of

contributions. To illustrate the challenge, as an initial

stage in identifying the core literature, we executed

article searches using keyword searches on related

terms (e.g. ‘industry* and (birth or emerg* or transit*

or transfor*)’) in ISI Web of Knowledge and Google

Scholar. This approach yielded more than 30,000

references. In addition to being a prohibitive number

of articles, despite the matching keywords very few

of these studies addressed the actual focus of this

review – the processes of the emergenceof industries.

To identify the key literature directly addressing

the industry emergence process among the multi-

ple descriptive historical accounts and policy-focused

articles, we first focused the keyword searches

on management-related journals. From the articles

matching the keywords, each of the four authors

formed an initial selection of potentially relevant arti-

cles addressing the focal topic. Wedefined the articles

with an explicit focus on the processes of industry

emergence as the core articles for the review. We ex-

cluded subsequent developments of new industries,

such as industry shakeouts and the maturity stage

(Agarwal and Tripsas 2008), as beyond the scope

of this review. Second, these lists were then pooled,

yielding a list of 137 potentially relevant articles, and

the articles in the pooled list were rated by each of the

authors independently in terms of core or non-related.

Those 54 articles that were identified unanimously as

core formed the first iteration of the core set. As the

third step, we then analysed the backward and for-

ward citations of this initial core set and identified

further potential articles for inclusion. This set of po-

tential articles was then reassessed along with those

articles of the first set that were identified as core by

at least two out of the four authors. After the analysis

we identified 65 core articles (the articles listed in

Tables 2 and 3 as well as the review article by Forbes

and Kirsch (2011) not listed in the tables) that fulfilled

the set criteria as the focus of the review.

Toput the industry emergence literature in its wider

context in the field of management studies, we also

analysed related literature that the industry emergence

studies frequently use as their theoretical foundation.

This literature covers topics such as the evolution of

markets (e.g. Agarwal and Gort 1996; Klepper 1996),

technology adoption dynamics and externalities (e.g.

Arthur 1989; Katz and Shapiro 1986), the emergence

and evolution of technological fields (e.g. Ander-

son and Tushman 1990; van Merkerk and Robinson

2006), and venture capital (VC) and government pol-

icy (e.g. Edler and Georghiou 2007; Zook 2002).

Stages of industry emergence

The length and complexity of the industry emergence

process has posed a challenge for extant research

in terms of defining the stages of the process, their

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