Too much of a good thing? Product proliferation and organizational failure

Citation
Wp. Barnett et J. Freeman, Too much of a good thing? Product proliferation and organizational failure, ORGAN SCI, 12(5), 2001, pp. 539-558
Citations number
88
Language
INGLESE
art.tipo
Article
Categorie Soggetti
Management
Journal title
ORGANIZATION SCIENCE
ISSN journal
1047-7039 → ACNP
Volume
12
Issue
5
Year of publication
2001
Pages
539 - 558
Database
ISI
SICI code
1047-7039(200109/10)12:5<539:TMOAGT>2.0.ZU;2-3
Abstract
When organizations make important changes, such as introducing products bas ed on new technologies, they may gain strategic advantages but they also ex perience disruptions. We argue that these disruptions are especially strong when organizations introduce multiple products simultaneously, leading to a temporary increase in the hazard of organizational failure. To test this hypothesis, we study the effects of new product introduction on the surviva l of U.S. semiconductor manufacturers. We find that having a large number o f products-especially innovative products-lowers organizational mortality r ates, but that mortality rates increase because of the simultaneous introdu ction of multiple products. This hazard is substantial, amounting to an inc rease in the market exit rate of over 40% for the "average" case of simulta neous product innovation. These results are robust in models that control f or a wide variety of other factors. Our findings call into question the ide a that organizations can overcome disruptions from structural inertia by in troducing multiple products simultaneously.