Growth of De Alio and De Novo firms in the new and renewable energy industry

Firms entering new markets are either de alio, with business experience in other areas, or de novo, without such experience. De alio firms enter markets in advantageous situations, while de novo firms enter markets with innovation capabilities. This study determines whether de alio or de novo firms achieve faster sales growth as well as the duration of their growth when they enter the new and renewable energy industry. Panel data for global companies that entered the new and renewable energy industry after the 1990s show that de alio firms achieved higher growth rate than did de novo firms in the initial stages, but that entry type’s contribution to sales growth gradually decreased and disappeared four years after entrance. The results indicate that accumulated resources and new entrants’ former experiences in other industries have positive effects, contributing to initial success after market entry for a limited time. This finding suggests that firms improve the R&Cs (resources and capabilities) that are appropriate to their new environments for sustainable development.