Marketing Papers

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Journal Article

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California Management Review





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Shakeouts loom large in the landscape of all fast-growing markets. During the boom period, an unsustainable glut of competitors is attracted by forecasts of high growth and promises of exceptional returns. Even when the market is already crowded, more entrants keep arriving. These followers are often naïve about the barriers to entry and don't realize how many others are also poised to enter at the same time. Reality intrudes with a bust that precipitates the exit of more than 80 percent of the players through failure or acquisition. This shakeout is triggered by some combination of disappointing growth, pricing pressures that degrade profit prospects, or shortages of crucial people and financial resources.

Copyright/Permission Statement

Published as Day, G.S., Fein, A.J., & Ruppersberger, G. Shakeouts in Digital Markets: Lessons from B2B Exchanges. California Management Review 45, no. 2: 131-150. © 2003 by the Regents of the University of California.

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Date Posted: 15 June 2018

This document has been peer reviewed.