| Industry convergence occurs when the firms in two previously distinct industries become direct competitors. This dissertation investigates firms' strategic responses to the phenomenon. My research makes two contributions to the literature on industry convergence and firm response. First, it provides a clear conceptual framework, with demand and supply-side elements, for understanding and measuring industry convergence. Second, it systematically analyzes the responses of a group of firms in a converging industry, using longitudinal or panel data.;In the dissertation, I develop a reduced-form model of the industry and firm-level antecedents of two firm-level strategic responses: "convergent diversification" and "intra-industry acquisitions." The model generates eight pairs of hypotheses about the determinants of a firm's response level. I test the hypotheses using 1987--97 data on the 95 largest U.S. commercial banks, which faced the challenges of U.S. commercial and investment banking convergence. I report the results from three separate estimations---fixed-effects, random-effects Tobit, and a two-part model.;The results of my study indicate that the levels of industry convergence have limited effects on a firm's response levels. Instead, firm characteristics are more significant determinants of the response. Specifically, a firm's overall assets, industry-specific skills, and the demographic characteristics of its top management team determine the response level (and type). |
