Episodic change: A new approach to identifying industrial transition

Abstract

This study aims to suggest a new approach to identify the emergence of an industrial transition, which refers to an episodic change. The causes of episodic change, referred to episodic events, categorized into introduction of new technological characteristics, product speciation, and producer change. The introduction of new technological characteristics is defined as a change in the number of technological characteristics introduced in the process of product evolution, which is an essential event in the evolution of the product improving the performance of products. Product speciation addresses a phenomenon that a new product having an additional technological characteristic than existing products is sequentially released in the market, which determines whether the product forms a new product category or it remains as a mutation. Finally, producer change is observed through the entry types of firms that released products in a new product category. Since each indicator can be regarded as a precursor of episodic change, episodic change occurs in the evolution of the product when all three indicators are satisfied. This study analyzes cell phones released between 2004 and 2013 to determine whether an episodic change has occurred in the mobile phone industry. We identify the precursor of episodic change by analyzing the events that occurred before the change. This study helps to establish the direction of industrial policy to trigger the episodic change of products through the proxies for precursors.