Thinking about industry decline : A qualitative meta-analysis and future research directions

This is an electronic reprint of the original article. This reprint may differ from the original in pagination and typographic detail. Author(s): Title: Year: Version: Please cite the original version: All material supplied via JYX is protected by copyright and other intellectual property rights, and duplication or sale of all or part of any of the repository collections is not permitted, except that material may be duplicated by you for your research use or educational purposes in electronic or print form. You must obtain permission for any other use. Electronic or print copies may not be offered, whether for sale or otherwise to anyone who is not an authorised user. Thinking about industry decline : A qualitative meta-analysis and future research directions Lamberg, Juha-Antti; Ojala, Jari; Peltoniemi, Mirva Lamberg, J.-A., Ojala, J., & Peltoniemi, M. (2018). Thinking about industry decline : A qualitative meta-analysis and future research directions. Business History, 60(2), 127156. https://doi.org/10.1080/00076791.2017.1340943 2018 Full Terms & Conditions of access and use can be found at https://www.tandfonline.com/action/journalInformation?journalCode=fbsh20 Business History ISSN: 0007-6791 (Print) 1743-7938 (Online) Journal homepage: https://www.tandfonline.com/loi/fbsh20 Thinking about industry decline: A qualitative meta-analysis and future research directions Juha-Antti Lamberg, Jari Ojala & Mirva Peltoniemi To cite this article: Juha-Antti Lamberg, Jari Ojala & Mirva Peltoniemi (2018) Thinking about industry decline: A qualitative meta-analysis and future research directions, Business History, 60:2, 127-156, DOI: 10.1080/00076791.2017.1340943 To link to this article: https://doi.org/10.1080/00076791.2017.1340943 © 2017 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group Published online: 25 Jun 2017. Submit your article to this journal Article views: 629 View Crossmark data Citing articles: 2 View citing articles Business History, 2018 VoL. 60, no. 2, 127–156 https://doi.org/10.1080/00076791.2017.1340943 Thinking about industry decline: A qualitative meta-analysis and future research directions Juha-Antti Lamberga, Jari Ojalaa and Mirva Peltoniemib aDepartment of History and ethnology, university of Jyväskylä, Jyväskylä, Finland; bschool of Business and economics, university of Jyväskylä, Jyväskylä, Finland ABSTRACT We analyze historical and longitudinal research focusing on industry decline. Our analysis suggests that the literature’s general reliance on a few meta-theoretical arguments has important consequences for how decline is framed and explained. We identify four meta-theoretical clusters in the literature: politics and market dynamics are seen as exogenous factors with deterministic features, whereas technology and management capabilities are framed as firm-internal failures with causally questionable explanations of how firm-level characteristics explain industry-level decline. We propose that it is important to understand the limitations of distinct meta-theoretical arguments for an enhanced theoretical and methodological understanding of what industry decline is, how it takes place, and why. Accordingly, this study contributes to business history research by restructuring and clarifying latent theoretical issues, demonstrating the pros and cons of researchers’ choices, and offering guidelines and propositions for researchers interested in industry decline. Introduction Business history is filled with examples of catastrophic decline processes of industries. Such decline processes have occurred, for example, in the British coal industry, the Detroit automobile industry, the Pittsburgh steel industry, and the Scottish knitwear industry.1 In retrospect, we can identify similar causal patterns of decline, including saturation of demand, foreign competition, problematic labor relations, and the inability to keep up with technological change. However, the historical research on the decline of specific industries is wildly heterogeneous in terms of content and results. Furthermore, the research corpus lacks a coherent structure and dialogical nature and consequently does not achieve a degree of clarity that would be helpful to either fruitful empirical research agendas or critical theoretical discussion.2 This is the case despite the fact that industry decline and industrial competitiveness are major research topics in business history, strategy, and economic geography. As Ray Stokes and Ralf Banken have proposed, the term ‘industry’ is problematic as such: it is a ubiquitous conceptualization that tends to change over time.3 We take a rather pragmatic stance with respect to how to proceed with this conceptual problem. We follow the © 2017 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group Th is is an Open Access article distributed under the terms of the Creative Commons Attribution-NonCommercial-NoDerivatives License (http://creativecommons.org/licenses/by-nc-nd/4.0/), which permits non-commercial re-use, distribution, and reproduction in any medium, provided the original work is properly cited, and is not altered, transformed, or built upon in any way. KEYWORDS industry decline; de-industrialization; business failure; business model evolution; industry life-cycles CONTACT Jari ojala [email protected] 128 J.-A. LAMBERG ET AL. conceptualizations of ‘industry’ as constructed in the research that we analyzed. Thus, although the analyzed industries exist in ‘real life’, they are also constructions made by the researchers. What makes our task easier is that in the analyzed decline literature, ‘industry’ is most often regarded as a location-specific entity: industry decline means that most of the analyzed studies examine decline in some region, country or area, even though at the global level, the industry in question as a whole did not decline. Moreover, decline processes are often related both to the development of other industries and the evolution of firms. Therefore, the evolution of industries – and the very definition of the term ‘industry’ – is bound to interplay not only between firms and their industries but also between industries that are different in time and space. Our mission is both to analyze the historical literature on industrial decline and to propose ways of moving forward from the theoretical and empirical understanding of this phenomenon. Our collection of literature reflects a heterogeneous tradition of research on industry decline, and it is not a coherent corpus that would enable a theoretically robust understanding of the different ways of defining and interpreting industrial decline. The vast majority of the literature consists of stand-alone studies that either explain a particular decline process or test the power of a specific theory in predicting decline processes. The two larger discursive clusters – the first group of studies focused on explaining industrial decline in the UK,4 and the second group of studies focused on the decline of the steel industry in the Western world5 – are so idiographic and historically and geographically oriented that they have not generated either additional theoretical progress or large-scale empirical projects. We do not argue for a one-size-fits-all approach to industrial decline. Nevertheless, we propose that we cannot expect theoretical development and an improved understanding of this phenomenon without the resolution of certain primary definitional and operational issues. Therefore, we aim to analyze the literature both to highlight what we already know about industrial decline and to synthesize a business historical analysis with neighboring fields, such as economic geography, strategic management, and more general (economic) history. We contribute to the literature in two ways. First, our analysis clarifies the historical background and structure of the decline literature. The observed fragmentation of the literature is an important antecedent of the field’s unpopularity: without a strong theoretical explanation for industrial decline, it is very difficult to either develop or challenge the current state of the research. Second, our research clarifies the definition of industrial decline and its antecedents. We offer a theoretical framework that aids future studies in framing and legitimizing empirical analyses. Although case studies and comparisons from business history are highly valuable for analyzing and understanding the processes of industrial decline, the uses of concepts and theoretical assumptions must be transparent before cross-fertilization between economically oriented social sciences is possible in the study of industry decline and industry evolution more generally. Method Because there are no hegemonic studies on industry decline, we engaged in a comprehensive and iterative process of searching and screening the literature.6 In addition, during the initial searches in Thomson Reuters Web of Science and Google Scholar, it became evident that the topic is being studied across the social sciences and humanities. This means that BUSINESS HISTORY 129 (a) articles are not the primary publication format (and therefore, the use of automated bibliometric methods is precluded)7 and (b) from the beginning, we were unlikely to find citation patterns or keyword links that we could use in a more formal analysis. Accordingly, following the guidelines of qualitative meta-analysis,8 we adopted an inductive strategy based on an interpretive reading of the material.9 Our analytical research process is described in Table 1. We started our research with a broad list of keywords and databases. Moreover, we searched the identified citation patterns,10 i.e. books and articles from the references of the analyzed books and articles. We also extended our search to French, German, and Scandinavian sources, hoping to find non-English research streams in the study of industry decline. Accordingly, we started our research with a list of 327 publications, which we reduced to 103. 11 For instance, publications were excluded if they either focused on national, firm or organizational decline or used the term ‘decline’ in a symbolic or dramatized sense. Thus, we are concerned with the literature that defines decline as a phenomenon in a specific industry (including numerous business firms) in one or several regions and/or countries in terms of its relative market position. Therefore, we distinguish decline from national economic growth/decline. Moreover, decline is not the same as deindustrialization, which typically characterizes the decline of one or many industries in one region or nation and focuses on economic geography.12 We also omitted business failures that concentrate on one firm that might operate in one or several industries. We acknowledge that literature search choices are not self-evident and that, in many cases, a publication may belong to several discourses. For example, David Koistinen examines the economic history of deindustrialization and industry decline. Likewise, Nicholas Crafts mixes industry and national levels.13 However, for the analytical process that we have adopted, it is necessary to limit ourselves to studies of a specific industry. Overall, it is unlikely that we have overlooked any important patterns of discourse from the most recent (our corpus does not incorporate much research from the pre-1945 period) literature: single books or articles may have been missed, but not to the extent that their inclusion would dramatically change our findings. In the final phase of our data collection and screening process, we understood that unlike many other review studies, 14 our literature review lacked a coherent and unifying theoretical and conceptual core. For that reason, we were unable either to pinpoint certain a priori themes or to structure the literature according to only a few dimensions. For example, we identified more than 30 theoretical themes or distinct theories (e.g. the ‘resource-based view’ or ‘rent-seeking’); many historical studies made no explicit mention of theories or methods; and some studies were based on theories that operate on a different analytical level from the empirical context. For example, many studies of British post-war industrial decline explain decline either as a function of entrepreneurial failure15 or as a symptom of macro-economic dynamics,16 although commenters17 have long proposed that simplifications of decline, on the one hand, and the causes identified (e.g. Fordism versus flexible specialization), on the other hand, have little to do with the empirical evidence provided. Following qualitative research of texts, we analyzed the identified publications in two phases. During the first round of reading, we marked each publication according to their theories, methods, research objects, geographical focus, time periods, and other attributes that would identify each text simultaneously as an entity and as part of a larger research cluster. After marking and creating a database, we used different filter combinations to find 130 J.-A. LAMBERG ET AL. Table 1.Description of the analytical process. Step Action description Arena Search and limit parameters Outcome step 1: Keyword search initial search of research that potentially focuses on industry decline. Bibliographical information stored in refWorks. iterative reading of titles and keywords for the broadening of the keyword list We used a host of electronic databases and search engines, including Jstor, Libris, the Library of Congress, the British Library, the Lse Library, Google scholar, Web of science, and scopus declin, failure, collaps, or deindustriali, niedergang, fall AnD industr, or organizat, AnD economics, sociology, management or history 327 publications: 194 books and 133 articles step 2: initial screening reading abstracts and publication titles refWorks omission of publications that did not focus directly on decline 244 publications: 118 books and 126 articles. step 3: screening publications More intensive reading of abstracts and entire publications by two members of the research group. Consensus decision about the publications that were omitted at this stage and those that were core articles and books to retain in the corpus refWorks and Web of science for the analysis of citation patterns We omitted publications that focused on firms and organizations and those that did not focus on decline. industry and industrial cluster stabilized as the main unit of analysis. Additionally, some publications were omitted because of their questionable scientific value (i.e. problematic content and/or publication outlet) 46 publications: 32 books and 12 articles step 4: Collecting full texts Collection of books and articles. Digitalization if necessary (by taking digital photos) electronic databases (especially ebrary, Jstor, eBsCo, and ProQuest) and London-area libraries (especially Lse and the British Library) omission of a few more articles and books that were either not found or not relevant 41 publications: 30 books and 11 articles step 5: Focused search re-search of publications based on the reading of the full texts already found and their lists of references see step 1 We used the original keywords and conducted searches on certain industries and authors 103 publications: 46 books, 25 journal articles, and 31 chapters from edited volumes step 6: interpretive reading and categorization We read and analyzed the corpus by using the full-text articles and books in addition to an excel spreadsheet in which the publications were listed and attributed with keywords the entire corpus stored in a Dropbox folder Generation of keywords that identified the found literature: research period, geographical focus, industry, discipline, name(s) of the used theories, method (if articulated), etc see step 5 BUSINESS HISTORY 131 patterns and clusters among the publications. We identified only three clusters that could be characterized as evolving scientific discourses. First, the largest academic discussion of industry decline concerns the reasons for the UK’s loss of its competitive advantage to Germany and the US.18 Although the UK discourse primarily concerns traditional business lines from the first industrialization era (i.e. steel, cotton, and coal),19 the general tone of the discourse is the overarching inertia in international competition in practically all industries.20 The second distinctive group of publications pertains to the evolution of the steel industry. As in the case of the UK discourse, the steel industry discourse is phenomenon-driven, albeit on an international scale. The core narrative concerns the loss of competitiveness in the UK and then in the US, Germany, and all traditional steel-producing countries. The steel industry discourse emphasizes the failed interventions of governments, the poisonous influence of labor unions, and entrepreneurial failures. 21 Finally, the discourse of ‘others’ includes a variety of studies from different theoretical and methodological angles. The studied industries ranged from fisheries to fertilizers and from machine tools to pulp and paper. The studies covered a wide geographical range that encompasses the US, Canada, France, Portugal, Japan, Turkey, Egypt, Tanzania, the Nordic countries, and Chile. Some studies presented data covering several European countries; others even presented global data. This heterogeneous corpus helped us identify new approaches to studying and understanding industry decline. In the next section, we summarize and offer a theoretical interpretation of how industry decline is de facto defined and measured in the literature. We then turn our attention to four meta-theoretical explanations for industry decline that we identified from the literature. How the industry decline literature defines decline While coding our material, we found considerable variety in relation to the dependent variable, i.e. what is measured and explained when researchers study industry decline. The following list captures the most typical candidates for what industry decline is: • Decreasing profits (price-cost margin) and decreasing output • Declining sales • Inability to renew/declining profits • Decline relative to competitors • Declining international market share • Industrial organization structure (management’s ability to create an architecture capable of renewal) • Competitive decline, no innovations, organizational inefficiency • Declining market share, declining profits • Declining market share, inferior technology • Decline as a cognitive measure • Organizational decline, unwillingness to adapt modern practices, industrial inefficiency • Declining exports • Lower productivity of innovative activities (patenting) and weaker stock market performance • Employment growth rate 132 J.-A. LAMBERG ET AL. • Decreasing growth of research and development (R&D) investment, decreasing share of basic research as opposed to applied research and development, decreasing share of domestic inventors compared with foreign inventors filing patents • Decreasing capital investments (new plant and equipment), declining R&D expenditure, declining share of domestic patents From all of these definitions, we identified five larger categories that by and large cover the definitions provided in the examined studies. The first category treats decline as a downward trend in output. This definitional category covers decreasing sales, smaller quantities of units produced and overcapacity (i.e. a discrepancy between production and sales). Paul A. Tiffany, for example, defines ‘industry decline’ in the context of the US steel industry as the ‘continuing deterioration of America’s steel performance in the international market.’ 22 Another example is Liza Piper’s study of Canadian fisheries in which industry decline is diagnosed according to decreasing output.23 The second type of decline definition centers on investment trends as synonyms and/or measures of decline: decreasing or ceasing investment in production capacity. Anthony DiFilippo, for example, uses a multitude of indicators, one of which is decreasing capital investment in plants and equipment.24 The third category associates decline with the deterioration of investment rates in technology and innovation. Scholars regard decline in such investment as the absence of new products, low patenting rates and decreasing R&D investment rates. For example, Ashish Arora et al. diagnose the decline of the Japanese information technology (IT) industry based on Japan’s lower patenting rates compared with those of their US competitors.25 DiFilippo then uses both the declining R&D expenditure and the declining share of patents filed by US firms to signal the decline of the US machine tool industry.26 The fourth category covers financial indicators such as decreasing profitability, poor solvency status, poor stock market performance, decreasing contributions to the national economy, and domestic producers’ decreasing market share. For example, Einar Lie uses decreasing profitability as an indicator of decline in the European fertilizer industry, and Fred Mannering et al. use the drop in market share of domestic producers in the US automotive manufacturing industry to signal industry decline.27 Finally, a few studies measure industry through changes in industry structure, typically through decreasing firm numbers. For example, Joonas Järvinen et al. use decreasing firm numbers as indicators of global decline in the pulp and paper industry.28 The observed diversity in the indicators of industrial decline inevitably results in and reflects a situation in which empirical studies do not explain the same phenomenon. For example, despite a lack of investment in capacity or innovation, sales may increase. A decrease in firm numbers may indicate the working of economies of scale in which average firm size increases along with production and sales. Stock market performance may depend more on a plethora of future risks than on any observed contraction in current operations. Finally, hypothetical decline processes do not correspond with any economic measures of decline,29 serving more as a narrative resource than as an empirical construct. D.N. McCloskey provides the following explanation:30 ‘Although mildly fashionable among historians, neither of these alternatives could be considered to have been successful in replacing the hypothesis of failure, because both were introduced in the same nonquantitative way as entrepreneurship itself. The form of argument adopted by both sides in the debate was qualitative isolation of one variable – entrepreneurship, BUSINESS HISTORY 133 interrelatedness, slowly growing demand – was sufficient to explain a good part of the apparent lag in technology.’31 An implicit understanding of decline as the inability to change and renew an intentional decision to exit32 is a common notion across the sampled literature. For example, Murat Cizakca argues that the Bursa silk industry declined in the 16th and 17th centuries because price volatility led to a change in production strategy.33 The US cut nail industry declined, according to Amos J. Loveday, because firms and their managers were unable to adapt to changing technology: ‘Failure to recognize the need for, and the long-term profitability of, industrial research was the missing component in a management philosophy that was otherwise remarkably successful.’34 This de facto definition of decline as the opposite of renewal has an intriguing association with the theoretical premises of industry life cycle theory: renewal would require the building of protective institutional barriers, the development of new technological innovations, or the creation of new industries. In all of the studies included, at least one of these renewal alternatives failed and the entrepreneurs decided to exit. We now scrutinize the reasons for decline identified in our literature collection. Analysis The first round of our qualitative interpretative analysis resulted in 32 suggestions as reasons for industry decline. We aggregated these categories as four meta-theoretical clusters of explanations, which (a) enable us to group individual studies according to their explanatory logic (e.g. role of agency and evolution) and (b) suggest directions for future research. These meta-theoretical clusters are policy and institutional environment, market dynamics, technology, and capabilities. Policy and the institutional environment at large Our collection of decline literature primarily treats policy decisions and the institutional environment as exogenous factors. Although many studies acknowledge that firms and industry associations attempt to affect and modify public policies,35 and that in many cases government is an active player in the decline process, most authors seem to treat decline processes according to their regulatory and institutional environments.36 This approach is an interesting choice: most pluralist theorists of political decision-making would argue that firms and industry associations intentionally compete for public goods in the ‘political market place.’37 The studied collection of decline literature identifies other actors, such as labor unions38 and industrial actors in other countries and other industries;39 however, the focal industries are rarely viewed as operating in the same network of commitments.40 In some cases, firm management and other industry leaders are accused of mismanaging their stakeholder networks (typically, labor unions and government);41 however, studies viewing firms and other organizations as embedded in the same institutional environment that affects their decline process are either rare or non-existent. Today’s political economists assume that two factors influence the evolution of industries (and hence, the downward spiral), thus providing the theoretical background for the question of the government’s role. First, representatives of the field of new political economy (which is based on historical evidence and empirical data) assume that certain institutional elements 140 J.-A. LAMBERG ET AL. and Edgerton question the very existence of this decline in the UK.121 Lazonick considers managerial failure as a key determinant of the decline of British industries. According to him, British businessmen failed (to even try) ‘individually or collectively to transform their industrial environment’; they instead ‘took the conditions facing them as given’.122 However, as Roger Lloyd-Jones and Myrddin J. Lewis suggest, British industrial decline cannot be explained by a similar failure to renew and take advantage of new technologies in all industries. They suggest, for example, that the Sheffield metal industry was based on ‘quality production and flexible technology’ and thus resembled its American analog.123 Derek F. Channon argues that British industrial corporations suffered from managerial deficiencies, such as a lack of expertise in relevant pricing, inefficient production, poor industrial relations, low capital investment, and preferences for colonial markets.124 In a similar vein, Joonas Järvinen et al. find that firms in the global pulp and paper industry were locked into their previously successful paths and were unable to adapt to a changing environment. 125 Barry E.C. Boothman’s study offers a more detailed explanation for the lack of adaptation: in the Canadian pulp and paper industry, corporate reporting practices masked firms’ financial status and resulted in overinvestment and excess capacity.126 Such reporting practices hint at unethical behavior. Furthermore, both Thomas P. Carney and Amos J. Loveday offer ethical failure as the reason for industry decline: idealistic leaders of the past have been replaced by profit-motivated opportunists.127 In addition to a lack of skill and ethics, managerial failure is tied to national culture. In the case of the British cotton industry, the decline is explained by the rise of corporate economies in Japan and the US, where the new corporate culture was better equipped to ‘create conditions for new profitable opportunities.’128 Numerous studies analyzing British industrial decline, whether during the late nineteenth century, the turn of the twentieth century, or after the Second World War, tend to emphasize a certain, almost culturally embedded tradition of managers adhering to old methods and practices. 129 However, culturally bound managerial failure is not solely a British phenomenon. The fall of the Japanese IT industry has also been explained in cultural terms: as software innovations have become more important, Japanese firms have suffered because the Japanese are not prone to software innovation.130 The capabilities-based explanation of industrial decline ultimately lays the blame on managers. Managers lack required skills because of poor education or culturally bound norms and values. Could a different set of managers have saved an industry in decline? According to empirical research on management’s impact on survival, we simply do not know the answer to this question. Thus, and unsurprisingly, the wide capability literature on industry decline has found it difficult to define and assess the causal relationship between managerial activities and decline. Robert A. Ankli and Eva Sommer, for example, claim that the decline of the American steel industry was indeed caused by management failure but that exactly where managers were active is a more problematic question, because managers were responsible for daily decisions about subject matter with far-reaching consequences. Ankli and Sommer conclude that American steel industry managers were incapable of renewing the business to return to its former success: ‘Management thought that they had the best industry in the world – what worked yesterday was thought to work just as well tomorrow.’131 A similar conclusion is obtained in several studies analyzing various lines of declining industries in Britain. However, again, a clear causal relationship might be hard to pinpoint. For example, according to Lorenz, the decline of the British shipbuilding industry was not necessarily caused by a management failure; it was instead caused by the failure to build BUSINESS HISTORY 141 trust between management and trade unions.132 However, this trust might be understood as an entrepreneurial function; thus, if it were neglected, the situation could be understood as a managerial failure in building trust with unions. Managerial failure boils down to the human tendency to prefer the familiar over the unfamiliar, which in managerial speak translates into a local search. Cognitive limitations result in changes that surface as surprises: the Scottish knitwear industry (i.e. knitwear firms and their managers) did not understand that it had lost its previous advantage,133 and British paper industry managers optimized production with information that, in retrospect, motivated them to make inferior technology choices.134 However, the same managers would be labeled successful heroes without the decline, which underlines not only the tendency to attribute failure to individuals but also the fact that an individual-level explanation is categorically wrong when aiming to explain industry-level decline processes.135 Accordingly, Teece’s proposal to have a rich modular base of capabilities would be helpful in renewing industries and does not regress to individual firms and their decisions.136 Discussion The analysis of our collection of industry decline literature revealed a fragmented body of research. The more than 100 publications focus on numerous industries, countries, and regions and use different theories and methods. The collection does not have a dialogical structure outside some classic themes in economic and industrial history (e.g. UK manufacturing in the twentieth century and the US steel industry). From this starting point, our study’s contributions are as follows. First, we redefine industry decline to clarify the research topic in future studies. Second, we generate theoretical propositions based on historical evidence. Third, we make some suggestions about how to study industry decline and what might arise as limitations in such inquiries. A (re)definition of industry decline Our collection of literature reflects an interesting paradox: only a few industries have completely disappeared from industrial history. Conversely, a large US steel industry still exists; cars are manufactured in the UK; and Nordic paper industry firms are larger than before their industry started to decline. Our results suggest that the manner in which decline is conceptualized may be a key factor in determining the types of explanations that researchers find and the policy options that decision-makers derive from these findings. Therefore, one key contribution of our research is that researchers studying industry decline should be more careful and explicit in how they conceptualize decline and should consider whether their conceptualizations match their implicit and explicit cause-effect modeling. Accordingly, to clarify empirical research and theory development, we propose a reformulated definition of industry decline – and in some sense a redefinition of industry.137 We propose viewing an industry from a configurational and identity-based perspective. In other words, firms in the declining industry are members of a population characterized by similar business models138 and industry recipes. By business model, we mean the product offerings, management system, network, and value-creation practices that (a) have a modular structure and (b) are historically contingent.139,140,141 By industry recipe,142 we mean the collective method of cognitively ‘making sense’ of the link between the business model and the market 142 J.-A. LAMBERG ET AL. environment.143 That said, in a given historical moment, some firms may be members of a population of firms sharing business model characteristics and thoughts about industry boundaries, product ontology, and reputational ranking (i.e. who’s who in the industry).144,145 This membership, however, does not mean that a firm could not have/obtain membership in other industries or that its operational and cognitive characteristics will remain the same forever. This also means that we treat decline as a collective inability or unwillingness to change a dominant industry recipe and business model, which is then reflected in measurable deterioration of economic performance. Why do industries not transform? An obvious takeaway from our research sample is that decline is largely the opposite of renewal. Building on the analysis of our collection of literature, we propose ways in which politics, market competition, technology, and capabilities may catalyze industry decline by preventing renewal. These factors target three alternative ways of renewing the industry: (1) creating barriers to entry; (2) rejuvenating the mature industry through innovation; and (3) reframing the industry and its boundaries. The industry life cycle literature recognizes all three mechanisms as potential strategies against declining performance.146 Our contribution is to identify the causal links between the antecedents of decline as specific to these three mechanisms of renewal. Table 2 below lists the potential causalities. Many of these observations restate theoretical predictions from the literature on industrial organization,147 capabilities,148 and new political economy.149 Complementing existing assumptions, we may identify three central processes that help explain and predict the inability to renew. The following list and Figure 1 present these three processes. (1) Hindrance: The process starts from a combination of changing technology and subsequent market dynamics. Technological change inflates existing technological capabilities and together with insufficient organizational capabilities, hinders renewal. (2) Demotivation: Industry architecture (i.e. the combination of structure and incentives150) demotivates renewal because actors are embedded in organizational and social networks, making it difficult to experiment with alternative strategies. (3) Constraint: Political interventions and the ‘web of commitments’.151 For business history research, our theorizing means a shift from studying the causes and effects of decline towards studying the processes of uneasy renewals and overall dynamics driving these processes. Additionally, with respect to our causal matrix (Table 2) the 12 theoretical notions offer fine-grained starting points to focus on specific theoretical questions instead of aiming for comprehensive explanations. For example, we call for more nuanced research on the role of politics in catalyzing industry decline. Although current research has mostly focused on the role of governments in the creation or non-creation of entry barriers, our proposition is that governments’ role goes much deeper into innovation processes (including research and education) and how governments reframe the industry and its boundaries. Likewise, the role of technology development would require extensive focused research to reveal the deeper mechanisms driving technological inertia and thus problems in coping with competition. Finally, although we find it difficult to locate evidence on inferior management and leadership at the firm level as causes of industry-level decline, BUSINESS HISTORY 143 Table 2.How decline categories affect renewal strategies. Creating entry barriers Rejuvenating the mature industry through innovation Reframing the industry and its boundaries Politics in the short run, the allowance of market buffers (cartels; monopolies) may slow decline processes. in the long run, an increasingly weak market position will eventually result in collapse Political interventions are not a necessary or sufficient condition for the emergence of new innovations. However, the lack of political support may decrease industrial research and thus accelerate decline processes Political interventions are not a necessary or sufficient condition for reframing industry.However, political interventions may have a legitimizing effect153 on reframed identity, thus accelerating decline processes Market dynamics Market competition may importantly motivate the creation of entry barriers After the beginning of perceived industry decline, market competition may motivate firms to make new product innovations After the beginning of perceived industry decline, market competition may motivate firms and associations to engage in rhetorical reframing and business model innovations technology A lack of industrial research and a cumulative knowledge gap may motivate firms to seek political protection in the form of entry barriers Large-scale industrial research enables the emergence of new innovations.Likewise, a lack of or insufficient industrial research is a sufficient condition for industry decline technological capabilities enable business model innovations and industry reframing.Likewise, insufficient technological capabilities prevent or problematize business model innovations and industry reframing Capabilities Meta-level capabilities by industry leaders and political decision-makers enable changes in the industry architecture.Likewise, a lack of such capabilities contributes to industry decline A large set of pre-existing capabilities enables the emergence of new innovations. Likewise, a lack of organizational capabilities contributes to industry decline A large set of organizational capabilities enables industry reframing and the creation of new business models. Likewise, a lack of organizational capabilities contributes to industry decline 144 J.-A. LAMBERG ET AL. we propose studying the role of political decision-makers and influential figures in national innovation systems as inhibitors of renewal.152 For example, earlier studies of industry evolution and innovation management in Germany reveal that specific outcomes (our case industry decline or renewal) are the results of configurations of institutions, capabilities, and firm-level adaptation. 153 The management of challenging situations equally requires orchestration of institutional frameworks, engineering research and education, and firm-level adaptability. The examples by Murmann and more recent studies on nanoeconomics suggest that industry-level dynamics should be studied from below. Such research requires data for all firms in a certain population and methodological tools to cope with the emerging complexity.154 While such a level of detailed analysis is not possible for some cases, it opens opportunities for business historians to study industry decline with a level of accuracy that has not been typically seen in the neighboring disciplines in social sciences. Conclusions The analysis of industry decline literature revealed four dominant meta-theoretical explanations causing industry decline. The first is institutional environment, emphasizing the role of the government, labor unions, and influence of special interest groups as the causes for decline. The second emphasizes market dynamics and international competition explaining the decline of industries in certain geographical areas. This literature indicates that decline is caused by cost differences in production, transport, marketing, etc. The third explanation is technological: falling behind in technological development causes industry decline. Technological change can even destroy global industries as new products and services create new industries that displace existing ones. The fourth widely noted cause for decline is related to capabilities, which historical studies usually identify as entrepreneurial failure and managerial deficiencies. Figure 1.Process framework of industry decline and renewal. BUSINESS HISTORY 145 Based on the wide body of decline literature, we redefined industry decline and made theoretical propositions and suggestions for further studies in industry decline. Stokes and Banken state that business historians and social scientists tend to be more interested in firms than in industries.155 Therefore, although the interplay between firms and their industries will be highly valuable when analyzing industry decline, the interplay between industries and governments and innovation systems more broadly is equally important. Finally, the primary underlying message of our analysis and theoretical work is that instead of forcing a narrative structure for the study of industry decline, researchers would benefit from (a) focusing on the processes of renewal problems instead of explaining backwards from outcomes and (b) using narrower and theoretically more robust study settings. Notes 1. See, for example, Edgerton, Science; Supple, British Coal Industry; Rubenstein, Changing U.S. Auto Industry; Hoerr, Wolf Finally Came; Porac, Thomas, and Baden-Fuller, ‘Competitive Groups’. 2. Edgerton, ‘Decline of Declinism’; McCloskey, Economic Maturity. 3. Stokes and Banken, ‘Constructing an “Industry”’. 4. For example, Elbaum and Lazonick, Decline of British Economy; Mass and Lazonick, ‘British Cotton Industry’. 5. For example, Mény and Wright, Politics of Steel. 6. Cf. Simsek, Fox, and Heavey, ‘What’s Past is Prologue,’ that starts from Stinchcombe’s research on imprinting conditions. 7. Ramos-Rodríguez and Ruíz-Navarro, ‘Changes’. 8. Schreiber, Crooks, and Stern, ‘Qualitative Meta-Analysis’. 9. Butler, ‘Towards Hermeneutic Method’. 10. C.f. Simsek, Fox, and Heavey, ‘What’s Past is Prologue’. 11. The decline literature used in this article is marked with asterisk (*) in the list of references. 12. Rowthorn and Wells, De-industrialization. 13. Koistinen, ‘Dealing with Deindustrialization’; Koistinen, Confronting Decline; Crafts, ‘Forging Ahead’; Crafts, ‘British Relative Economic Decline’. 14. Bozeman, ‘Technology Transfer’; Ramos‐Rodríguez and Ruíz‐Navarro, ‘Changes’. 15. Wiener, English Culture. 16. Crafts, ‘Forging Ahead’. 17. Booth, ‘Manufacturing Failure’; Edgerton, ‘Decline of Declinism’; McCloskey, Economic Maturity. 18. Edgerton, ‘Decline of Declinism’. 19. Crafts, ‘Forging Ahead’. 20. For example, Koerner, Strange Death. 21. For example, Mény and Wright, ‘Politics of Steel; Temin, Relative Decline; Tiffany, Decline of American Steel’. 22. Tiffany, Decline of American Steel, 158. 23. Piper, ‘Parasites’. 24. DiFilippo, ‘Military Spending’. 25. Arora, Branstetter, and Drev, ‘Going Soft’. 26. DiFilippo, Military Spending. 27. Lie, ‘Market Power’; Mannering et al., ‘Brand Loyalty.’ See also Catalan Vidal, ‘Stagflation Crisis’ and Donelly, Begley, and Collis, ‘West Midlands Automotive Industry’. 28. Järvinen et al., ‘Fall and Fragmentation’. 29. For example, Collins and Robbins, British Culture. 30. Mantere et al., ‘Narrative Attributions’. 31. McCloskey, Economic Maturity, 32. 32. Harrigan, Strategies for Declining Businesses. 33. Cizakca, ‘Price History’. 146 J.-A. LAMBERG ET AL. 34. Loveday, Rise and Decline, 150. 35. For example, Cassing and Hillman, ‘Shifting Comparative Advantage’; Dintenfass, Managing Industrial Decline. 36. DiFilippo, Military Spending; Dunnett, Decline of British. See also Pardi, ‘Industrial Policy’ and Fetzer, ‘Reversing Gear’. 37. For example, Shepsle, ‘Congress’; Keim, ‘Business and Public Policy’. 38. Eisenhammer and Rhodes, ‘Politics of Public Sector’; Tiffany, Decline of American Steel. See also Fetzer, ‘Reversing Gear’. 39. Bakker, ‘Decline and Fall’; Moen, Decline. 40. Argyres and Liebeskind, ‘Contractual Commitments’; Barley, ‘Building’. 41. Tiffany, Decline of American Steel. 42. North, Institutions; Acemoglu, Johnson, and Robinson, ‘Institutions’; Acemoglu, Johnson, and Robinson, ‘Reversal of Fortune’. 43. Dunleavy, Democracy; Shepsle, ‘Congress’. 44. Mizruchi, Structure. 45. Acemoglu, Johnson, and Robinson, ‘Institutions’. 46. Gray and Lowery, ‘Interest Group Politics’; Hadani and Schuler, ‘In Search of El Dorado’. 47. DiFilippo, Military Spending. 48. Richardson and Dudley, ‘Steel Policy’; Womack, Decline of American. 49. McCloskey, Economic Maturity. 50. DiFilippo, Military Spending. 51. Tiffany, Decline of American Steel. 52. Koistinen, ‘Dealing with Deindustrialization’. 53. Tiffany, Decline of American Steel, 168. 54. Elbaum and Lazonick, ‘Institutional Perspective,’ 2. 55. Wiener, English Culture. 56. Lorenz, ‘Evolutionary Explanation,’ 931. 57. See Edgerton, ‘Decline of Declinism’. 58. Brown, ‘Collapse,’ 596. 59. Mannering et al., ‘Brand loyalty’. 60. Dormois, ‘France’s Experience’. 61. Cassing and Hillman, ‘Shifting Comparative Advantage’. 62. Anand and Singh, ‘Asset Redeployment’. 63. DiFilippo, Military Spending. 64. Koistinen, ‘Dealing with Deindustrialization’. 65. Lorenz, Economic Decline in Britain. 66. Tenold and Nordvik, ‘Coping’. 67. Sjögren, ‘Shipping as Gambling’. 68. Poulsen and Sornn-Friese, ‘Downfall Delayed’. 69. Ojala and Räihä, ‘Navigation Acts’; Layton, Evolution. 70. For example, Abe and Gourvish, Japanese Success? 71. Bakker, ‘Decline and Fall,’ 310; Malerba, Semiconductor Business. 72. Chandler, Scale and Scope; Clutterbuck and Crainer, Decline and Rise; Crafts, ‘Forging Ahead’; Crafts, ‘British Relative Economic Decline’; Elbaum and Lazonick, Decline of British Economy; Owen, From Empire to Europe. Literature review in Dintenfass, ‘Converging Accounts’ and in Edgerton, Science. 73. Edgerton, ‘Decline of Declinism’. 74. Howe, Dundee Textiles; Lazonick, ‘Competition,’ Lazonick, ‘Industrial Organization’. 75. Elbaum, ‘Steel Industry’; McCloskey, Economic Maturity; Owen, From Empire to Europe. 76. Burton, Rise and Fall; Lorenz, ‘Evolutionary Explanation’; Lorenz and Wilkinson, ‘Shipbuilding Industry’. 77. Church, Rise and Decline; Dunnett, Decline of British; Whisler, British Motor Industry. 78. Brown, ‘Collapse’. 79. Tomlinson, Morelli, and Wright, Decline of Jute. BUSINESS HISTORY 147 80. Hendry, Innovating for Failure; Kelly, British Computer Industry. 81. Dintenfass, Managing Industrial Decline; Supple, British Coal Industry. 82. e.g. Asian toy production in the 1970s and 1980s, Brown, ‘Collapse’. 83. E.g. the American vs. British cotton industry, Lazonick, ‘Industrial Organization’. 84. McCloskey, Economic Maturity, See also Edgerton, Science; Edgerton, ‘Decline of Declinism’. 85. Dosi, Pavitt, and Soete, Economics of Technical Change; Porter, Competitive Advantage of Nations. 86. Tomlinson, Morelli, and Wright, Decline of Jute. 87. Ullman, Anatomy of Industrial Decline. 88. Loveday, Rise and Decline. 89. Kaukiainen, Ulos Maailmaan, 11–12. 90. Tomlinson, Morelli, and Wright, Decline of Jute. 91. Panza, ‘De-industrialization’. 92. Bakker, ‘Decline and Fall,’ 318. 93. Blecker, ‘Markup Pricing’. 94. Murmann, Knowledge. 95. Coker, Fisheries; Cushman, Guano. 96. Loveday, Rise and Decline. 97. Hautala, Suomen Tervakauppa. 98. Bakker, ‘Decline and Fall’. 99. Brown, ‘Collapse’. 100. Klepper, ‘Industry Life Cycles’. 101. Bakker, ‘Decline and Fall’. 102. Ojala, Voutilainen, and Lamberg, ‘Evolution’. 103. Lie, ‘Market Power’. 104. Bakker, ‘Decline and Fall’. 105. Cizakca, ‘Price History’. 106. Tenold, Iversen, and Lange, Global Shipping; Harlaftis et al., World’s Key Industry. 107. Lazonick, ‘Competition’. 108. Panza, ‘De-industrialization’. 109. Mannering et al., ‘Brand Loyalty.’ See also Helper, ‘Strategy and Irreversibility’. 110. Malerba, Semiconductor Business. 111. Burton, Rise and Fall. 112. Lorenz, Economic Decline in Britain. 113. Audretsch, ‘New-Firm Survival’. 114. March, ‘Exploration and Exploitation’; O’Reilly and Tushman, ‘Ambidexterity’. 115. For example, Teece, ‘Explicating Dynamic Capabilities’; Patel and Pavitt, ‘Technological Competencies’. 116. See also Napolitano et al., ‘In Search’. 117. Teece, ‘Explicating Dynamic Capabilities,’ 1322. 118. For example, Ankli and Sommer, ‘Role of Management’. 119. Argyres and Liebeskind, ‘Contractual Commitments’. 120. For example, Alfrod, ‘Flagging or Failing?’; Chandler, Visible Hand; Chandler, Scale and Scope. 121. McCloskey, Economic Maturity; Edgerton, ‘Decline of Declinism’. 122. Lazonick, ‘Competition,’ 37. 123. Lloyd-Jones and Lewis, ‘Personal Capitalism’. 124. Channon, Strategy and Structure. 125. Järvinen et al., ‘Fall and the Fragmentation’. 126. Boothman, ‘High Finance/Low Strategy’ 127. Carney, False Profits; Loveday, Rise and Decline. 128. Lazonick, ‘Industrial Organization’; Lazonick, ‘Competition’. 129. For example, Alford, ‘Flagging or Failing?’; Burton, Rise and Fall; Collins and Robbins, British Culture; Wiener, English Culture. 130. Arora, Branstetter, and Drev, ‘Going Soft’. 131. Ankli and Sommer, ‘Role of Management,’ 230. 148 J.-A. LAMBERG ET AL. 132. Lorenz, ‘Evolutionary Explanation’. 133. Porac et al., ‘Competitive Groups’. 134. Magee, ‘Competence or Omniscience?’. 135. Laamanen et al., ‘Explanations of Success’. 136. Teece, ‘Explicating Dynamic Capabilities’. 137. See Cattani, Porac and Thomas ‘Categories and Competition’ and Stokes and Banken, ‘Constructing an “Industry”’. 138. Cf. Romanelli, ‘Evolution’. 139. Zott and Amit, ‘Fit Between’. 140. Aspara et al., ‘Strategic Management’. 141. Chesbrough and Rosenbloom, ‘Role of the Business Model’. 142. Spender, Industry Recipes. 143. Porac et al., ‘Competitive Groups’. 144. Fiss, ‘Set-Theoretic Approach’. 145. Porac et al., ‘Competitive Groups Revisited’. 146. Klepper, Industry Life Cycles; Harrigan, Strategies for Declining Businesses; McGahan, ‘How Industries Change’; Menzel and Fornahl, Cluster Life Cycles. 147. For example, Porter, Competitive Advantage. 148. For example, Jacobides, ‘Architecture and Design’; Teece, ‘Explicating Dynamic Capabilities’. 149. For example, Acemoglu, Johnson, and Robinson, ‘Institutions’ 150. Jacobides, ‘Architecture and Design’. 151. Argyres and Liebeskind, ‘Contractual Commitments’ constrain renewal attempts by both maintaining barriers of exit and demotivating renewal attempts in cases in which public authorities support the declining industry via protectionist policies and subsidies. 152. Gerschenkron, Economic Backwardness. 153. Murmann, Knowledge, and Kogut and Zander, ‘Did Socialism’. 154. Murmann, Knowledge, and Braguinsky and Hounshell, ‘History’. 155. Stokes and Banken, ‘Constructing an “Industry”’. Acknowledgements We thank the discussants and reviewers of 2015 Business History Conference in Miami, Industry Studies 2016 Conference in Minneapolis, 2017 Academy of Management meeting in Atlanta, and workshops and seminars at the University of Jyväskylä during the years 2012 and 2017 for comments and insights. We are indebted to David Koistinen, Ari Hyytinen and Kalle Pajunen for their comments and help. Finally, we acknowledge research assistance of Jarmo Taskinen, Nooa Nykänen, and Aleksi Rauhala in coding and arranging parts of the research material. Disclosure statement No potential conflict of interest was reported by the authors. Funding This work was supported by Academy of Finland [grant number 269654] Notes of contributors Dr. Juha-Antti Lamberg is a Professor of Strategy and Economic History at the University of Jyväskylä. His research has focused on history of strategy and industry evolution. He has published research in the Academy of Management Review, Strategic Management Journal, the Journal of Management Studies, Industrial and Corporate Change, Academy of Management Learning & Education, as well as other leading BUSINESS HISTORY 149 journals. Prof. Lamberg has won the 2008 Sloan Foundation’s Industry Studies Best Paper Prize, the 2009 Carolyn Dexter Award in 2009 at the Academy of Management Conference, and the 2015 Outstanding Article of the Year at the Academy of Management Learning & Education. Dr. Jari Ojala is a professor of comparative business history at the University of Jyväskylä and the Editor-in-Chief in Scandinavian Economic History Review. He specializes in economic, business and maritime history. His recent articles include “Deskilling and Decline in Skill Premiums during the Age of Sail: Swedish and Finnish Seamen, 1751–1913” (with Jaakko Pehkonen ja Jari Eloranta) in Explorations in Economic History 61 (2016): 85–94 and “Maritime History: A Health Check” (with Stig Tenold) in International Journal of Maritime History 29, no. 2 (2017): 344–354. In 2016 Ojala was awarded the Finnish Academy of Science and Letters’ Eino Jutikkala Prize for outstanding research in history. Dr. Mirva Peltoniemi is a senior researcher in Technology Management at University of Jyväskylä. Her research focuses on the interplay of technological change and industry structure. She has published research in International Journal of Management Reviews, Technology Analysis and Strategic Management, and Games and Culture, among others. She is also a consulting editor for International Journal of Management Reviews. ORCID Juha-Antti Lamberg http://orcid.org/0000-0003-3173-0199 Jari Ojala http://orcid.org/0000-0002-4348-8857 References NOTE: The decline studies used in the analysis are marked with asterisk (*) Abe, E., and T. R. Gourvish, eds. Japanese Success? British Failure? Comparisons in Business Performance since 1945. Oxford: Oxford University Press, 1997.* Acemoglu, D., S. Johnson, and J. A. 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