Jones, Candace
2001
Co-evolution of Entrepreneurial Careers, Institutional Rules and Competitive Dynamics in American Film, 1895-1920

911
“How does a new industry and its institutional rules and competitive dynamics emerge and then change?”

“A co-evolutionary approach examines change over time by using multiple levels of analysis, multidirectionality, the role of positive feedback, and the importance of historical context (Lewin and Volberda 1999).”

912
“A co-evolutionary process marrying insights from institutional and resource-based views provides the conceptual base for this study. Institutional theory reveals how entrepreneurs’ careers are embedded in social systems (e.g. Baum and Dutton 1 996; Dacin et. al. 1 999) and ‘serve as the primary conduit by which larger social conditions become incorpo­rated into organizational strategy and structure’ (Boeker 1988: 35).”

“When many firms or a few dominant firms commit themselves to certain practices, despite alternatives, they initiate an industry’s trajectory. In co-evolutionary terms, institutional theory enhances our understanding of initial conditions (i.e., how entrepreneurs’ career history affects current firm practices through retention processes) and feed forward (i.e. how entrepreneurs’ strategic choices carve an indus­try’s future through selection processes) (Levinthal and Myatt 1994). Institutional theory explains where firm strategies and practices come from and how competitive moves and resource claims take place within a spe­cific institutional context.”

Definition-resource-based view:
“A resource-based view complements an institutional perspective (Oliver 1997). A resource-based view explains how firms erect barriers to imita­tion, based on either property rights or knowledge (Miller and Shamsie 1996).”

“When these barriers create above average returns for a firm, they are called strategic isolating mechanisms, which ‘make competitive positions stable and defensible’ (Rumelt 1984: 567; Mahoney and Pandian 1992).”

913
“The American film industry is well suited for studying co-evolutionary processes because it experienced a shift from being technology-driven to content-driven.”
-> The same will happen to the EA industry! A little differently though: there is no patentable technology yet, it’s the newness at the moment. But a shift to content will happen sooner or later.

“there is a wealth of archival data due to the intense efforts by the American Film Institute and historians to archive all available information from the industry’s inception to its pre­ sent day. This reduces, if not eliminates, left censoring problems that plague most studies of new industries (Aldrich 1999).”

914
“New industries do not emerge de nouveau; they arc shaped by extant social institutions, social trends that create new opportunities, and by entrepre­neurs who both open up and cultivate those opportunities. Several theoret­ical perspectives illuminate how new industries emerge. Evolutionary scholars argue that entrepreneurs must generate legitimacy at multiple lev­els for their novel activities (e.g. Aldrich and Fiol 1994; Hunt and Aldrich 1998; Aldrich 1999). Resource-based scholars argue that industry emer­gence and change is intimately related to capabilities of firms comprising the industry (e.g. Collis 1990; Levinthal and Myatt 1994). Neo-institutional scholars focus on field formation and trace how entrepreneurs’ interests, networks (e.g. Stern 1979; DiMaggio 1991) and use of cultural, and his­torical elements create and alter institutional trajectories (e.g. Leblebici et al. 1991; Holm 1995).”

“Changes in social and economic conditions open up opportunities that allow entrepreneurs to blossom (Peterson and Berger 1971). For example, Hoffman (1999) shows that disruptive events became opportunities to re­negotiate how environmental management was enacted. Entrepreneurs cul­tivate these opportunities by applying their repository of knowledge and relationships gained through their careers (Bird 1994), which are sequences of work experiences (Arthur et al. 1989).”

915
“Institutional isolating mechanisms are revealed when entrepreneurs are reluctant to alter their capabilities, especially in dynamic environments (Oliver 1996, 1997). Capabilities generate barriers to imitation when knowledge about resource conversion processes is is ambiguous or socially complex (Reed and DeFillippi 1990; Miller and Shamsie 1996).”
-> The environment of film has become dynamic, but film people often do not want to alter their capabilities.
-> Interview partners have capabilities that few others have in the complex EA environment -> competition is slow to emerge.

916
“By 1920, eight of the ten major technology players who had dominated the early industry between 1895 and 1910 were bankrupt or had exited the industry.”

“industry consolidation by major content players, once the battles for dominance between technology and content firms had been resolved.”

917
“Since I am concerned with tracing how entrepreneurs’ knowledge and net­works, captured by a career history, co-evolve with an industry, multiple firm foundings by the same entrepreneur were counted as one firm found­ing.”

918
“To situate the film industry within its historical context, as co-evolution­ary (Lewin and Volberda 1999) and evolutionary (Aldrich 1999; Romanelli 1989) analyses demand, an overview of the industry is provided.”
-> Does thesis need an industry overview? Is chapter 1 enough?

“The emer­gence of the industry focused on resolving technical challenges and devel­ oping hardware for the industry; this focus shifted to movie content”

918f
“The American film industry experienced two distinct periods and two groups of entrepreneurs were critical to each time period. These two groups battled for control over the industry from 1911 to 1917. This period shift from technology-driven to content-driven influenced all firms in the film population”

919
“When the industry began, entrepreneurial efforts were directed towards solv­ing technical challenges and developing hardware. This defined industry insti­tutional rules, and shaped competitive dynamics among firms. As technology was refined and hardware standardized, audience interest in the new medium grew. Entrepreneurial challenges shifted to developing techniques for, and providing high-quality film content. This shift required different competen­cies, defined new competitive dynamics and altered institutional rules. A key event marking the shift from technology to content was the production and release of the first American feature film, The Life of Moses, released in five parts between December 1909 and January 1910 (AFI Catalog, 1911-1920: xv).”

“The content period had greater national eco­nomic prosperity and industry growth than did the technology period.”
-> If EA wants to become big, they have to create more compelling content instead of just newness.

921
“In emerging industries, a key strategy of entrepreneurial firms is negotiat­ing and gaining legitimacy, because it enhances not only firm, but indus­try survival.”

923
“Law suits amongst industry players negotiated rules of play, defining who could play and what constituted a viable barrier to imitation in the industry.”

925
“nickelodeons attracted and were associated with ghetto dwellers – immigrants and blue-collar workers [not true, see Balio, T; 1985; Novelty blah] (Merritt 1987). This shift in movie exhibition outlets and audience membership altered social atti­tudes towards film from technological awe (Musser 1990) to concerns that movie houses were ‘recruiting stations of vice’ (Bowser 1 994). The peri­odical, Moving Picture World, noted, in 1909, that, since 1905, ‘the mov­ing picture business occupied in public esteem a position so offensive, so contemptible, and in many respects so degrading that respectable people hesitated to have their names associated with it’ (quoted in Bowser 1994: 37). A challenge, therefore, from 1905 onwards, for content entrepreneurs, especially immigrants, was to legitimize film as an acceptable rather than suspect activity of ghetto dwellers, and to legitimize their participation in a new country and a new industry.”

“The legitimacy strategy of immigrant content entrepreneurs was cultural rather than regulatory. They imitated the high culture symbols and formats of Broadway theatres to evoke accepted cognitive heuristics from con­sumers, such as providing uniformed ushers, plush chairs, two-hour shows, and elaborate buildings (Balio 1985). When these firms moved into pro­duction and distribution, they used similar tactics.”

“Content firms, founded primarily by immigrants, built the industry’s consumer base by establishing the legitimacy of film as a form of entertainment.”
-> EA has to do the same.

“Legitimacy was critical to firms, since, between 1895 and 1920, 60 percent died within their first year of commercial life.”

926
“the competitive dynamics for content-era firms were higher rates of entry and shorter lives.”
-> It would be logical for this to be true for EA as well.

“Skilled content entrepreneurs learned from first movers’ mistakes and were able to leapfrog competition by utilizing cul­tural symbols more effectively.”

929
“Technology entrepreneurs’ legitimacy claims and strategic isolating mechanism s were based on patents, lawsuits, and finally on pooling their patents into a technology cartel. Content entrepreneurs’ legitimacy strategies involved cultural symbols to evoke consumer acceptance and interest. These different legitimacy strate­gies demanded distinct resources and firm capabilities”

“dominant technology firms came from manufacturing careers and imported an economizing logic of action. In con­trast,content firms came from retail careers and imported a marketing logic.”

930
“Edison posted an agent in London who purchased European competitors’ originals, mainly those of Melies and Pathe Freres, shipping them to Edison to be duped [copied and sold as one’s own] before the foreign manufacturer could market the films in the United States (Balio 1985; Musser 1991 : 239).”

933
“content entrepreneurs perceived talent rather than technology as their key resource and developed organizational capabilities and systems for managing talent.”

934
“Feature film, as a new product, spurred the co-evolution of value chain governance, industry rules of play, and competitive dynamics, all of which were significantly different from those based on film as a commodity prod­uct. Entrepreneurs participated in this co-evolution.”

935
“By 1927, the United States was supplying 90 percent of the motion pictures watched by consumers outside the United States (Halsey et al. 1985: 200).”

“Content firms developed control over distribution channels and capabilities in film genres that were easily understood and appealed to diverse audiences. These became a major source of national competitive and sustainable advantage for the United States.”

“Entrepreneurs’ careers are a repository of knowledge and networks that provide institutional resources (i.e., cultural models, rules of thumb, structural positions, and socio-political legitimacy) and important insights into firm practices, such as the legit­imacy strategies pursued, the resources perceived as valuable, and the capabilities developed. These firm practices generated differential outcomes in terms of market share and survival rates between technology and con­tent-era firms.”

“In the technology era, the regulatory legitimacy of patents and patent infringement suits inhibited new entrants by raising barriers to entry. Indeed, new entrants did not emerge until patent litigation had been resolved. In contrast, content-era firms used cultural legitimacy strategies by mimicking high culture, which legitimized the industry and lowered barriers to entry, thereby encouraging new entrants. Content-era firms were not able to stem the inflow of new entrants until they discovered the importance of locking up talent in long-term contracts and controlling the value chain through vertical integration.”

936

937
“By understanding entre­preneurs’ careers, we may be in a better position to predict shifts in an industry that may render current capabilities disadvantageous.”

938
“By waiting for uncertainty to lessen, entrepre­neurs entered the industry when institutional rules of play and competitive dynamics had already been contested and negotiated. Thus, newly entering firms had less leverage in co-evolving the industry to meet their own needs.”

939
“Strategic iso­lating mechanisms influenced industry trajectories by providing positive feedback on firm practices.”
What firms do shapes the industry and therefore other firms. Quite logical.