How does institutional change affect heterogeneity among firms?
- 2002
This paper examines the variation in performance of incumbents and entrants following the deregulation of prices and entry in the airline industry. Our approach is similar to earlier evolution, we hypothesize that the performance of entrants will have higher variance than incumbents. Further, given the opportunities offered by price deregulation, we propose that incumbents will have higher variance in performance under deregulation than in the earlier regime. The findings indicate thanentrant performance heterogeneity is significantly greater than incumbent performance heterogeneity following deregulation, but that the variation in performance among icumbents does not significantly change when deregulation occurs. The second result in surprising given the range of service and process innovations that incumbents to future studies of performance variation within and across industries