Parallel Search as a Competitive Response: How Technological Positioning Affects R&D Strategy

Abstract

When faced with a choice between competing technologies in newly emerging industries, some firms choose to focus on a single technology while others hedge their bets by searching in parallel. This study examines the competitive factors that drive the choice to engage in parallel search. I propose that firms occupying stronger technological positions are more likely to search in parallel because redirecting some R&D investment towards competing technologies can reduce the risk of failure in case their supported technology does not emerge as dominant while still maintaining their original advantage. The effect of position on the choice of search strategy is moderated by the degree of threat that rivals pose to a firm’s technological position. I test my hypotheses using data on the development of competing rechargeable battery chemistries between 1989 and 2005. Results provide empirical support for the effect of position on search strategy, and show that positional threat positively moderates the effect. These findings contribute to the literatures on organizational search and technological evolution by suggesting that competitive forces have an important effect on the use of search strategies to manage risk prior to the emergence of a dominant technology.