Institutions, Institutional Change, Strategic Assets and Competitive Advantage of American and French Film Industries (1895-1998)

This paper uses neo-institutional economics (I.E.) to examine why French film production firms have lost their competitive advantage to their American competitors from 1895 to 1998. I.E. posits that major institutional changes result in changes in firms' strategic assets and strategies as well as in strategic industry factors. This causal path represents a bold shift in perspective from Industrial Organization, which considers the institutional environment as exogenous and largely beyond the reach of strategy. The same holds for the Resource-Based View. Several propositions stemming from neo-institutional economics are examined with a qualitative historical methodology. Robust evidence is provided to confirm the importance of neo-institutional explanations of strategic and industry changes over the whole period under study. However, institutions and institutional change have not been the sole drivers of industry and firms evolutions: chance (technologies and wars) and cognitive models of industry players also played their part, albeit complementary.