Successive leadership changes in the regional jet industry

D. Vertesy

Research output: Book/ReportReportAcademic

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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. Bombardier's 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.
Original languageEnglish
Place of PublicationMaastricht
Publication statusPublished - 1 Jan 2014

Publication series

SeriesUNU-MERIT Working Papers


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