Product Adaptation During New Industry Emergence: The Role of Start-Up Team Preentry Experience

Although prior literature argues that product adaption is critical to survival in new or dynamic industries, we have very limited information about the antecedents to product adaptation. This paper focuses on start-up top management teams (TMTs) and explores the impact of different types of preentry experience - preentry experience breadth, depth, and type (entrepreneurial and business experience) - on the likelihood that start-ups adapt their products. The hypotheses are tested among the population of U.S. solar photovoltaic start-ups during a period of industry emergence from 1992 to 2007. The analysis suggests that preentry experience breadth and experience in other dynamic settings (entrepreneurial) increases the ability of start-up TMTs to learn quickly about their environment, thereby increasing the likelihood of product adaptation. By contrast, deep preentry experience in the industry, although valuable in many other ways, can lead to narrow learning that decreases the likelihood of adaptation. These results underscore the importance of preentry experience to product adaptation. The results also underscore the role and patterns of product adaptation in firm, industry, and technology evolution.