Ambition in innovation: Vicarious learning in the nascent electric scooter market in Taiwan

Abstract

Past evidence shows that firms in nascent markets rarely earn handsome rewards from pursuing technological superiority. The process by which firms in these nascent markets align their product technology strategy with their technological advantage remains unclear. This study examines how firms with strong technological resources tamp down the uncertainty inherent in such markets using vicarious learning – observing the initiatives of peer organizations and taking cues from them. Using a unique hand-collected dataset from the nascent Taiwanese electric scooter market, we find that firms often strategically release lower-performing products than their capabilities might dictate. Technologically capable firms are found to offer lower technological specifications than could be developed with the resources they control; their ambition is further attenuated by the presence of a market leading firm. We contribute to the literature by shedding light on how firms use vicarious learning to determine the technical parameters of their product offerings. Our findings suggest the wisdom of a step-wise approach in which firms release a less perfect product than their technological stock allows and improve the product through a sequence of smaller – yet still consequential – innovations.