This study explores the role of user knowledge in the U.S. guitar industry's evolution from 1833 to 2023, focusing on the industry’s 20th-century transformation into a major cultural and economic force. It contrasts the parallel patterns of innovation, firm entry and user demand for acoustic and electric guitars, and how these changed before and after the establishment of a dominant design. We identify key innovations for each category — particularly those driven by the industry’s ongoing efforts to increase instrument volume — identifying the similarities and differences between their respective innovation trajectories and outcomes. We document the waves of new firm entry and innovation during these two centuries, both for acoustic guitars and the new electric guitar category created by American firms in the mid-20th century. From this longitudinal perspective, we document the shifting nature and returns to innovation for firms in each wave, contrasting the technological ferment of the early electric guitar with improved quality and customer experience in the late 20th century. We also demonstrate the role of user innovation both in helping existing firms and creating new firms. From this, we discuss what the guitar industry demonstrates about shifting opportunities for entrepreneurial entry through the industry’s life cycle, as well as the (often overlooked) importance of user innovation in mature industries.
