Building architectural advantage in the US motion picture industry: Lew Wasserman and the Music Corporation of America

Abstract

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. © 2009 EURAM Palgrave Macmillan. All rights reserved.