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Building architectural advantage in the US motion picture industry: Lew Wasserman and the Music Corporation of America
Author(s) -
Ferraro Fabrizio,
Gurses Kerem
Publication year - 2009
Publication title -
european management review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.784
H-Index - 32
eISSN - 1740-4762
pISSN - 1740-4754
DOI - 10.1057/emr.2009.24
Subject(s) - studio , corporation , architecture , film industry , entertainment , entertainment industry , divestment , vertical integration , music industry , institutional logic , production (economics) , business , marketing , industrial organization , movie theater , sociology , economics , visual arts , computer science , telecommunications , art , social science , finance , macroeconomics , music education
This article contributes to the literature on industry architecture by identifying the conditions that enable the emergence of architectural advantage. To understand how one firm can shape the industry architecture in its favor, we analyzed a historical case study on the role of Lew Wasserman and the Music Corporation of America (MCA) in the evolution of the motion picture industry in the United States. We focused on two major disruptive events: the 1948 Paramount Decree which forced vertically integrated movie studios to divest their theaters, and the explosion of television as a new form of entertainment in the 1950s which became an alternative for exhibiting movies. In both these cases, one company, MCA, managed to improve substantially its standing by occupying and consolidating a position of advantage in the industry or, in other terms, an ‘architectural advantage’. We show how in both cases this was the result of interactions between the Studios, constrained by the institutional logic of the industry, the regulatory framework, and MCA's introduction of novel practices. The latter consolidated its grip on talents and facilitated the growth of independent production and TV production.