Abstract
We examine how a firm’s technological capability and CEO experience independently and jointly influence the firm’s innovation choices during the time of industry emergence. We identify product and application innovations as two prominent innovation choices during industry emergence and theorize that diversity and relatedness of technological capability as well as of CEO experience work differently in shaping product versus application innovations. We suggest that important insights can be generated by blending literature streams on capability and cognition. Results based on data from the emerging industry of small satellites show that while firms with related technologies are more likely to pursue product innovations, this effect becomes non-significant when their CEOs have more diverse industry experience. On the other hand, firms with more diverse technologies could be more likely to pursue application innovations, but this likelihood is reduced for firms that have CEOs with more related industry experience. We contribute to the literature by explaining the unique roles of technological capability and CEOs in influencing innovation choices in an emerging industry context and by integrating insights from previously separated literature streams on capability and cognition.
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