This paper proposes that rival firms not only search for new capabilities within their organization, but also for those that rest in their competitive environment. An integrated analysis of these search processes at both firm and industry levels of analysis shows how their interaction makes industries and firms coevolve over time. To contribute to an enhanced understanding of the concept of coevolution, a dynamic and integrative framework crossing meso and micro levels of analysis is constructed. This framework is applied to a longitudinal study of the music industry with a time-span of 120 years. The first part, a historical study, covers the period 1877 - 1990. The second part, a multiple-case study, covers the period 1990 - 1997. We conclude that search behavior drives coevolution through competitive dynamics among new entrants and incumbent firms and manifests itself in the simultaneous emergence of new business models and new organizational forms.

coevolution, competitive regime, longitudinal research, multilevel research, music industry
Firm Objectives, Organization, and Behavior: General (jel L20), Firm Organization and Market Structure: Markets vs. Hierarchies; Vertical Integration; Conglomerates (jel L22), Business Administration and Business Economics; Marketing; Accounting (jel M)
Erasmus Research Institute of Management
ERIM Report Series Research in Management
Copyright 2001, M. Huygens, C. Baden-Fuller, F.A.J. van den Bosch, H.W. Volberda, This report in the ERIM Report Series Research in Management is intended as a means to communicate the results of recent research to academic colleagues and other interested parties. All reports are considered as preliminary and subject to possibly major revisions. This applies equally to opinions expressed, theories developed, and data used. Therefore, comments and suggestions are welcome and should be directed to the authors.
Erasmus Research Institute of Management

Huygens, M.W, Baden-Fuller, C.W.F, van den Bosch, F.A.J, & Volberda, H.W. (2001). Coevolution of Firm Capabilities and Industry Competition (No. ERS-2001-61-STR). ERIM Report Series Research in Management. Erasmus Research Institute of Management. Retrieved from