the aggregate economy is prosperous and bust when the economy is in recession. In other words, industry cycles of many industries in a given country are correlated with the business cycles of the country. For other industries, mismatch and delay between different dynamics in markets is another important mechanism causing industry cycles. The Bullwhip effect at firm-level and game-like competition at industry-level can cause the sequential boom-bust movement in price, sales, capacity and investment in many industries. Finally, uneven pace of technology change appears to be another main driver of industry cycles as sales in an industry are likely to peak after a ‘dominant design’ has emerged. Strategic implications of industry cycles Some industrial dynamics can be better understood through the lens of industry cycles. For example, it has been found that industries become more concentrated during the industry cycle downturns. This phenomenon is consistent with the theory of Joseph Schumpeter which views downturns as providing a mechanism of ‘cleansing’ which allocates the resources to stronger competitors in the industry. Cyclical industrial dynamics constitute a key strategic setting for firms and thus bring many important implications to strategy-making of firms. For example, in the highly cyclical oil-well drilling industry, it has been suggested that, first, companies did adjust their strategic activities such as capital expenditure and asset allocation according to the stage of the cycle, and second, ‘optimal’ strategies varied across cycle stages. In the highly cyclical flat panel display industry, where there have been five upturns and downturns since the industry began in 1990, John Mathews demonstrated that there is a striking pattern in firms’ entry behavior, where not a single successful entry was engineered during an industry upturn. In the marketing literature, the pattern where firms are found to utilize recessions as times to enhance the standing of their brand, has also been noted. Notes Industrial processes Joseph Schumpeter