Competitive dynamics in face of technological discontinuity: a framework for action (original) (raw)
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Technological Discontinuities and Dominant Designs: A Cyclical Model of Technological Change
Administrative Science Quarterly, 1990
An evolutionary model of technological change is proposed in which a technological breakthrough, or discontinuity, initiates an era of intense technical variation and selection, culminating in a single dominant design. This era of ferment is followed by a period of incremental technical progress, which may be broken by a subsequent technological discontinuity. A longitudinal study of the cement (1888-1980), glass (1893-1980), and minicomputer (1958-1982) industries indicates that when patents are not a significant factor, a technological discontinuity is generally followed by a single standard. Across these diverse product classes, sales always peak after a dominant design emerges. Discontinuities never become dominant designs, and dominant designs lag behind the industry's technical frontier. Both the length of the era of ferment and the type of firm inaugurating a standard are contingent on how the discontinuity affects existing competences. Eras of ferment account for the majority of observed technical progress across these three industries.*
Research Policy 42 (2013) 1210– 1224, 2013
"The creative destruction of existing industries as a consequence of discontinuous technological change is a central theme in the literature on industrial innovation and technological development. Established competence-based and market-based explanations of this phenomenon argue that incumbents are seriously challenged only by ‘competence-destroying’ or ‘disruptive’ innovations, which make their existing knowledge base or business models obsolete and leave them vulnerable to attacks from new entrants. This paper challenges these arguments. With detailed empirical analyses of the automotive and gas turbine industries, we demonstrate that these explanations overestimate the ability of new entrants to destroy and disrupt established industries and underestimate the capacity of incumbents to perceive the potential of new technologies and integrate them with existing capabilities. Moreover, we show how intense competition in the wake of technological discontinuities, driven entirely by incumbents, may instead result in late industry shakeouts. We develop and extend the notion of ‘creative accumulation’ as a way of conceptualizing the innovating capacity of the incumbents that appear to master such turbulence. Specifically, we argue that creative accumulation requires firms to handle a triple challenge of simultaneously (a) fine-tuning and evolving existing technologies at a rapid pace, (b) acquiring and developing new technologies and resources and (c) integrating novel and existing knowledge into superior products and solutions."
1 Technology and Industry Evolution
2008
We would like to thank Barry Bayus, Martin Ganco, Scott Shane, and Mike Tushman for their helpful comments on this manuscript. We would also like to thank Tal Levy for research assistance.
Technological Evolution and Radical Innovation
Technological change is perhaps the most powerful engine of growth in markets today. To harness this source of growth, firms need answers to key questions about the dynamics of technological change: (1) How do new technologies evolve? (2) How do rival technologies compete? and (3) How do firms deal with technological evolution? Currently, the literature suggests that a new technology seems to evolve along an S-shaped path, which starts below that of an old technology, intersects it once, and ends above the old technology. This belief is based on scattered empirical evidence and some circular definitions. Using new definitions and data on 14 technologies from four markets, the authors examine the shape and competitive dynamics of technological evolution. The results contradict the prediction of a single S-curve. Instead, technological evolution seems to follow a step function, with sharp improvements in performance following long periods of no improvement. Moreover, paths of rival technologies may cross more than once or not at all.
Delayed creative destruction and the coexistence of technologies
Journal of Engineering and Technology Management, 2003
Disruptive innovations often engage in a fierce battle with incumbent technologies for hegemony. Past studies on technological innovations are silent about factors that extend the duration of the 'era of ferment'-that is, the period during which competing technologies fight for dominance. We argue that complexity of the underlying technology, ecological and institutional dynamics may permit coexistence of competing technology regimes. The paper illustrates such coexistence by discussing the persistence of disparate technologies in steel making and kidney disease treatment. We conclude that the process of 'creative destruction' can be delayed in certain settings.
Research Policy, 2013
The creative destruction of existing industries as a consequence of discontinuous technological change is a central theme in the literature on industrial innovation and technological development. Established competence-based and market-based explanations of this phenomenon argue that incumbents are seriously challenged only by 'competence-destroying' or 'disruptive' innovations, which make their existing knowledge base or business models obsolete and leave them vulnerable to attacks from new entrants. This paper challenges these arguments. With detailed empirical analyses of the automotive and gas turbine industries, we demonstrate that these explanations overestimate the ability of new entrants to destroy and disrupt established industries and underestimate the capacity of incumbents to perceive the potential of new technologies and integrate them with existing capabilities. Moreover, we show how intense competition in the wake of technological discontinuities, driven entirely by incumbents, may instead result in late industry shakeouts. We develop and extend the notion of 'creative accumulation' as a way of conceptualizing the innovating capacity of the incumbents that appear to master such turbulence. Specifically, we argue that creative accumulation requires firms to handle a triple challenge of simultaneously (a) fine-tuning and evolving existing technologies at a rapid pace, (b) acquiring and developing new technologies and resources and (c) integrating novel and existing knowledge into superior products and solutions.
Research Policy, 2020
We propose that in an era of ferment, when a firm's product design does not possess the features of the evolving dominant design, it faces a feature implementation gap defined as 'the number of features of the evolving product dominant design that are absent from a firm's product design'. Employing the performance feedback perspective of the behavioral theory of the firm, we conceptualize a feature implementation gap as a manifestation of an aspiration-performance gap that negatively affects a firm's likelihood of product market survival due to a product market 'lock-out'. To dynamically improve the alignment of their product designs with the evolving dominant design and increase their likelihood of product market survival, we suggest that firms engage in problematic search using alliances and acquisitions to decrease the feature implementation gap. We found strong support for our predictions using a longitudinally dynamic mediation model with data from an era of ferment in the digital camera product market between 1997-2004. Our study extends the behavioral theory of the firm to a novel context-eras of ferment. It demonstrates that in this context, problemistic search involved dual search modes-short-run search at the individual feature level and long-run search at the design level. It also shows the utility of adopting a demand-side (i.e. product market or customer based) perspective to explain how firms improve their likelihood of product market survival during eras of ferment. In this, it complements recent research that has examined how firms' internal actions affect product design realignment processes and firm outcomes in eras of ferment.
Unlocking a Lock-in: Towards a Model of Technological Succession
Applied Evolutionary Economics, 2003
This paper has three objectives. First, it seeks to set an agenda in which technological successions can be meaningfully discussed. Second, it aims to establish the necessary conditions under which a technological succession may occur. Third, in establishing this set of conditions, the paper identifies some useful analytical tools which could be employed in a formal model of technological transitions.
The Dynamics of Games of Innovation
International Journal of Innovation Management, 2007
Many executives see innovation as an unmanageable process, riddled with risks. The research we conducted with the Industrial Research Institute, interviewing over 200 vice-presidents of research and development and chief technical officers in many sectors around the world, yields a more nuanced view. Innovation becomes manageable once managers move away from normative prescriptions that view the process as uniform and recognise that different rules and practices apply to different circumstances. Our argument is that clusters of interdependent firms contributing to the building of a set of interacting products and services tend to self-organise themselves into distinct and relatively persistent "games of innovation". Such games operate at a meso level of analysis, grouping together many complementary agents, such as competitors, suppliers, public regulators, universities, innovation-support agencies, and venture capitalists. Six games of innovation, each with a distinct set...
The Coevolution of Technologies and Categories During Industry Emergence
Academy of Management Review, 2014
Scholars have long studied technology evolution. More recently, organizational theorists have begun to explore the role of categories and their associated labels in industry dynamics. Yet little is known about how technological designs and categories coevolve. We build on these two bodies of literature to develop an integrative model of how industries emerge and evolve. We propose that the evolution of both technological designs and categories follows a similar pattern, characterized by an early period of divergence followed by a period of convergence, and we identify the mechanisms that account for this coevolutionary process. We add to the literature on technological evolution by explicating the mechanisms through which designs evolve and identifying how different stakeholders' categorical understandings shape design competition. Our model also augments the categorization literature by detailing categorical evolution as a contested process of category creation and selection, which, in turn, is influenced by the designs that the categories are trying to group. Our model creates a much needed bridge between two bodies of literature that, while addressing similar topics, have evolved largely separately.