Solutions Looking for Problems: Idle Capacity, Repurposing and the Technological Landscape

Abstract

Prior research suggests that availability of complementary assets drives adoption of new technology. However, while firms may possess relevant complementary assets, they often fail to deploy them for new technology adoption. This study documents that the uptake of a new technology is more likely when necessary complementary assets are idle, and their redeployment costs are low. Empirically, I exploit an oil price decline in 2014 and study technology choices by firms in the wind power industry. Wind farms built by firms with oil and gas complementary assets following a steep oil price decline were more likely to adopt new technology, chiefly larger wind turbines, relative to other competitors. The effect is driven by wind farms located near existing oil and gas fields, suggesting that redeployment costs are an important driver of technology choice. This study contributes to technology management and resource redeployment literatures, documenting resource repurposing as a driver of technological change.