Abstract
This article investigates how regulated automakers and upstream component suppliers comply with “technology-forcing” regulations, or laws that set performance standards beyond their usual technological capabilities. In particular, this article examines how firms manage and organize their research and development (R&D) processes concerning automobile emissions control technologies amid the uncertainties resulting from the issuance of new regulations. This study involves the analyses of patents, interviews with experts, references to technical papers published for conferences of the Society of Automotive Engineers (SAE), and use of learning curves. The results of this study show that the high regulatory standards under the technology-forcing regulation played an important role in forcing technological innovations and determining subsequent direction of technological change. Component suppliers were important sources of innovation in the 1970s, but over the course of technological evolution, automakers gradually emerged as the locus of innovation. This study also shows that firms strategically manage architectural and component knowledge in the presence of uncertainties about their technological capacity to meet new auto emissions control standards.
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