Product Strategy and Industrial Leadership: Firm and Country Effects in the Worldwide Floppy Disk Drive Industry

We examine the effect of product strategy on firm performance in the worldwide floppy disk drive industry from its emergence in 1970 to 1998. We find that the effects of both product strategy and country of origin vary over the firm life cycle. Younger firms benefit from superior technology whereas older firms benefit from a broader product line. Firms that have an older portfolio of products experience higher failure rates especially at older ages. We find that Japanese firms experience lower failure rates both when they are very young and very old. Further analyses revealed that these effects result from having a younger portfolio of products and a broader product line at all ages. Japanese firms also catch up with firms from other regions in technological sophistication as they age. Industry leadership shifts from American and European firms to Japanese firms as the basis of competitive success changes from technological sophistication to possessing a broader product line of products that are frequently updated.