Template-type: ReDIF-Paper 1.0
Author-Name: Vertesy, D.
Author-Email: daniel.vertesy@jrc.ec.europa.eu
Author-Workplace-Name: Joint Research Center of the European Commission
Title: Successive leadership changes in the regional jet industry
Abstract: This study examines leadership dynamics in the regional jet 
	 manufacturing industry from the 1980s onwards. With the help of leading 
	 products aircraft or aircraft family, British Aerospace BAe, Fokker, 
	 Bombardier and Embraer consecutively took the leadership in terms of new 
	 deliveries. In order to understand the co-evolution of demand for 
	 aircraft, technology and industrial structure, the paper applies a 
	 framework for innovation system dynamics that investigates in detail the 
	 preconditions for growth, windows of opportunity and strategic response 
	 of firms. In the first major leadership change, BAe and Fokker lost 
	 their leadership to Bombardier, which was the first to respond to a 
	 combination of windows of opportunity more efficient jet engine 
	 technology, cheaper oil prices, market liberalization and the expansion 
	 of regional services boosted by the introduction of scope clauses that 
	 created a niche for the 50-seat market. Bombardiers radical innovation, 
	 the business-jet based CRJ200 became the leading product of the 1990s. A 
	 second leadership change occurred in 2005, as new demand and regulatory 
	 windows increasing oil prices, more competitive market, fluctuating 
	 economy, relaxing scope clauses opened new opportunities for the 70-120 
	 market segment to the detriment of both the 50-seat regional and 
	 150-seat large civil jet markets. The Brazilian Embraer, with its 
	 already proven design, manufacturing and marketing capabilities in the 
	 regional jet industry was the first to make a strategic move and 
	 introduce a new product line, the ERJ-170/190 specifically intended for 
	 this market. The fate of failed challengers and past leaders points to 
	 the importance of preconditions, timing of windows of opportunity, 
	 speedy strategic response by companies and a proper evaluation of future 
	 demand. The long lead time between development and entry into serial 
	 production necessitates favourable demand windows both during the 
	 development and the serial production phases in order to turn a new 
	 product into a leading product, thus timing of response was found to be 
	 critical not only for gaining leadership, but also for staying in the 
	 market and recovering sunk costs.  
Classification-JEL: F23, L21, L22, L62, O14, O32, O38
Keywords: Aircraft industry, Aircrafts, Jets, Market leadership, Market dynamics,
	 Innovation, Technological change, Industrial dynamics, Innovation policy 
Series: UNU-MERIT Working Papers
Creation-Date: 20140531
Number: 2014-046
File-URL: https://unu-merit.nl/publications/wppdf/2014/wp2014-046.pdf
File-Format: application/pdf
File-Size: 275 Kb
Handle: RePEc:unm:unumer:2014046