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  • May 2017
  • Article
  • Strategic Management Journal

The Reference Wars: Encyclopædia Britannica's Decline and Encarta's Emergence

By: Shane Greenstein
  • Format:Print
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Abstract

The experience of Encyclopædia Britannica provides the canonical example of the decline of an established firm at the outset of the digital age. Competition from Microsoft’s Encarta in 1993 led to sharp declines in the sales of books, which led to the distressed sale of the firm in 1996. This essay offers new source material about the actions at both Encarta and Britannica, and it offers a novel interpretation of events. Britannica’s management did not misperceive the opportunities and threats, and Britannica did not lack technical prowess. This narrative stresses that Britannica’s management faced organizational diseconomies of scope between supporting lines of business in the old and new markets, which generated internal conflicts. These conflicts hindered the commercialization of new technology and hastened its decline.

Keywords

Digital; Britannica; Diseconomies; Encyclopedias; Software; Books; Competition; Publishing Industry

Citation

Greenstein, Shane. "The Reference Wars: Encyclopædia Britannica's Decline and Encarta's Emergence." Strategic Management Journal 38, no. 5 (May 2017): 995–1017.
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About The Author

Shane M. Greenstein

Technology and Operations Management
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