Path Creation, Path Dependence and Breaking Away from the Path: Re-Examining the Case of Nokia

Jens Wang,Jonas Hedman,Virpi Kristiina Tuunainen

doi:10.4067/s0718-18762016000200003

Abstract

The explanation of how and why firms succeed or fail is a recurrent research challenge. This is particularly important in the context of technological innovations. We focus on the role of historical events and decisions in explaining such success and failure. Using a case study of Nokia, we develop and extend a multi-layer path dependence framework. We identify four layers of path dependence: technical, strategic and leadership, organizational, and external collaboration. We show how path dependence at these four interdependent layers can blindfold the organization from seeing and understanding the importance of intermediate outcomes, which in the case of Nokia was the importance of software ecosystems and adaptable mobile devices. Furthermore, we show how the layers of path dependence mutually reinforce each other and become stronger.

Highlights

Researchers and business managers have tried and are trying to understand why some firms succeed and some fail
We present our analyses of Nokia’s evolution, identifying the different phases of path creation, the critical junctures leading to path dependence, and Nokia’s attempt to break from lock-in to the path that was successful for many years, but eventually lead to grievous troubles and the sale of its mobile phone division to Microsoft
What our case analysis provides, is new understanding of the intertwined reasons and critical junctures at technical, organizational, strategic and leadership, and collaborative layers that first led to the creation of a path, and through lock-in to a path that was successful for a period of time

Summary

Introduction

Researchers and business managers have tried and are trying to understand why some firms succeed and some fail. One answer is the firm’s ability to cope with environmental changes, caused for instance by technological innovations. Technological innovation creates disequilibrium and change in the market [10] to which firms have to respond. Those that are successful have the ability to adapt or renew themselves through technological innovations and explore new business opportunities. Those that fail have made wrong choices or have been unable to make the necessary changes to their business model [19]

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Conclusion