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Using Game Theory for a Schumpeterian analysis of emerging industries: the historical case of the U.S. Steel industry

Maurer F, Fritzsche A (2024)

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Publication Language: English

Publication Type: Journal article

Publication year: 2024

Journal

DOI: 10.1108/JMH-11-2023-0116

Abstract

Purpose

This paper aims to explore the development of the US steel industry from the 19th to the 20th century by applying the Schumpeterian perspective on the concept of creative destruction. It introduces Game Theory as a means to describe patterns of strategic situations and entrepreneurial decision-making in an emerging industry.

Design/methodology/approach

Based on a narrative literature review of Schumpeter’s concept of creative destruction, four historical case studies have been designed. These historical case studies build the basis for game-theoretically analysis and evaluation. In doing so, the authors identify games with different payoff matrices that take place while an industry emerges, reflecting different layers of creative destruction.

Findings

Emerging industries, as this paper highlights, go through several stages of development until they reach full maturity. With Schumpeter, these stages can be studied through an entrepreneurial lens, highlighting different patterns of decision-making in each respective stage. This paper adds to a better understanding of emerging industries. Furthermore, this paper provides a methodological repertoire that can also be applied to other cases as well, such as the emergence of contemporary digital industries.

Research limitations/implications

The paper provides a horizontal overview of how Game Theory can be applied to analyze industrial epochs and how the concept of creative destruction works in industry and transforms industry. It introduces Game Theory to management and business history as a sound methodological base to analyze and evaluate strategic situations and entrepreneurial decision-making.

Practical implications

The paper presents a comprehensive method to act in the different stages of an industrial epoch and how to act. The games applied in the particular layers of creative destruction give an insight into the analysis of strategic situations and strategic decision-making in the industry.

Originality/value

This paper provides a horizontal perspective on strategic games that can be used as an analysis methodology in the field of entrepreneurship and applied in contemporary industries. It connects historical cases out of the US steel industry with Schumpeter’s concept of creative destruction and Game Theory.

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How to cite

APA:

Maurer, F., & Fritzsche, A. (2024). Using Game Theory for a Schumpeterian analysis of emerging industries: the historical case of the U.S. Steel industry. Journal of Management History. https://doi.org/10.1108/JMH-11-2023-0116

MLA:

Maurer, Florian, and Albrecht Fritzsche. "Using Game Theory for a Schumpeterian analysis of emerging industries: the historical case of the U.S. Steel industry." Journal of Management History (2024).

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