MT8 - Technology and Innovation Flashcards
Tushman and Anderson (1986)
Competence-enhancing innovation:
It is a process of small innovations until a dominant design emerges
Usually initiated by big, existing firms with expertise that get richer, and make entry to the market harder
Competence-destroying innovation:
Big breakthroughs are a result of an interaction between organisations, and create product discontinuities
Completely new technologies, quite rare
Initiated by new entrants unconstrained by prior technologies
Christensen (1997)
Several existing companies fail when a new technology transforms the market - they cannot adapt
The cause: resource dependence
1. Firms’ freedom of action is limited by entities outside of the company (customers and investors)
2. Since they give the resources to the company to survive, managers are powerless to change the firm’s decisions on strategy
3. Since the focus of investors and customers is to cut costs in the short-run, it is hard to focus on the big picture and adapt
4. As the firm tries to serve the existing customers, it might not realise the potential of an innovation that serves others
A way to go: spinoff ventures
Lieberman and Montogmery (1988)
First-mover advantages: Sustainable leadership in technology
1. learning curve model: costs fall with cumulative output - barriers to entry
2. R&D and patents: technology can be patented or maintained as trade secret
3. preemption of imput fators: purchasing inputs at a lower price (e.g. natural resources)
4. preemption of locations in geographic and product characteristcs space: limit the space available
5. Preemptive investment in plant and equipment
6. Switching costs: transaction costs for the firm’s buyers to switch later on from the first mover
7. Buyer choice under uncertainty: sticking to the first brand
Disadvantages:
1. Free-rider effects: other firms spare the R&D costs
2. Late-movers can gain edge through waiting for the resolution of market and technological uncertainty
3. Shifts in technology or consumer needs might create opportunities for later entrants
Benner & Tripsas (2011)
New product markets are usually created by firms in similar industries
A firm’s prior industry affiliation affects greatly the framing of the new industry in the nascent stage (they frame it in context with their existing product)
When several firms converge in a new industry, this creates heterogenity that shapes the market
In the long run, these initial beliefs disappear as firms get to know the new market
Henderson & Clark (1990)
Architectural innovation: innovation that changes the way the components of a product are linked together, while keeping the core design concepts
incremental innovation: builds on existing competencies, reinforces the position of an established firm
architectural innovation is often radical
it can be the rearrangement of an organisation’s core processes, or redisigning the architecture of software systems
