Encyclopedia of Technology and Innovation Management

Chapter 10. Innovation-driven Industry Life Cycles

Susan K. Cohen

University of Pittsburgh

Introduction

Industry life cycle (ILC) refers to a collection of theories and frameworks that explain how the major structural characteristics of industries change, and identify implications for firm strategy, organization, and survival. Our goal is to provide an overview of the ILC concept, which reflects the diverse approaches economists, marketing and strategic management scholars, and organizational theorists have adopted to study it. We first distinguish ILC from the closely related product life cycle (PLC) and technology life cycle (TLC) theories. Next, we introduce the Abernathy–Utterback version of ILC, which has received substantial attention within the management literature. Third, we discuss some of the challenges to the AU ILC, and summarize a predominant alternative to it. Fourth, evidence supporting ILC is offered. We conclude with a discussion of competitive dynamics over the life cycle and their managerial implications.

Industry, product, or technology life cycle?

The terms product life cycle, industry life cycle, and to a lesser extent technology life cycle, are often used interchangeably, which can make distinguishing these theories a chore. However, there are some important differences between them. PLC emerged from the marketing literature, and its unit of analysis is the product. Theodore Levitt introduced the term product life cycle in 1965 to describe the sales cycle of a ...