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 co-evolve over time. To contribute to an enhanced understanding of the concept of co-evolution, 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 co-evolution through competitive dynamics among new entrants and incumbent firms and manifests itself in the simultaneous emergence of new business models and new organizational forms.

capabilities, co-evolution, competitive regimes, longitudinal research, multi-level research, music industry, search behaviour, strategic renewal
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)
dx.doi.org/10.1177/0170840601226004, hdl.handle.net/1765/6469
ERIM Top-Core Articles
Organization Studies
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: Investigating the Music Industry 1877-1997. Organization Studies, 22(6), 971–1011. doi:10.1177/0170840601226004