Generational technology advancement and firm growth: A study of sales growth in the flat panel display industry

Abstract

Abstract Firms may pursue higher generations of technology to grow sales, but the effectiveness of this strategy is undetermined, because technological changes often create disruptions to the firm and its competitive environment. Understanding the effectiveness of a firm’s generational technology advancement strategy requires an examination of the contextual factors pertaining to generational technological change. Using data from the global flat panel display industry, we find that although generational technology advancement dampens sales growth, this negative effect is negated by a longer tenure in the industry, a lower level of technological innovativeness, and a greater product overlap with competitors. We contribute to the literature by highlighting the differences between generational technology and other types of innovation, and underscoring the interdependence between a firm’s generational technology advancement strategy and contingencies favoring firm growth. We advise leading technology firms to prepare for particular problems resulting from technology advancement, and offer lagging firms a game plan.