Intellectual property crises induced by incumbent firms and latecomer firms’ catch-up performance: evidence from different sectoral environments

Abstract

ABSTRACT Why and how do incumbent firms (IFs) induce crises for latecomer firms? How do latecomer firms (LCFs) manage the crises, and how does crisis management affect LCFs’ catch-up? To answer these questions, we look at crises induced by IFs and LCFs’ crisis management by drawing on competitive dynamics and crisis management theories. Based on two case studies in the telecommunications sector, we find that IFs induce crises using intellectual property (IP) lawsuits (called IP crises) for hindering LCFs’ catch-up. Two LCFs achieved different catch-up performance based on the effectiveness of subsequent IP crisis management. In particular, we also find that the sectoral environments, in terms of technological and demand regimes, can act as a moderator in the relationship between the IP crisis management and the catch-up performance. We propose a more fine-grained view in catch-up studies by suggesting that the constructs ‘IFs-induced IP crises’ and ‘LCFs’ IP crisis management”.