“Surfing” Radical Technological Change. Knowledge Relatedness and Firm’s Inventive Impact

Abstract

Radical technological changes often render obsolete most of the knowledge held by firms. What kind of knowledge then, allows firms to adapt in the presence of radical technological change? Research suggests that firms can adapt by deploying in-house knowledge within the domain that the technological change is based on. However, it is also conceivable that knowledge developed in other domains and/or acquired from external sources may assist adaptation in the face of such change. Research does not address this issue and is, therefore, silent about what is the best mode of knowledge recombination to adapt to radical technological change. To help resolve this issue, we apply an inductive empirical strategy and analyze patents granted within photography, in the context of the industry’s 30-year paradigm shift from chemical to digital technology (1974-2004). Our results show that leveraging prior own experience within the emerging knowledge domain has positive, but smaller, effects on firms’ inventive impact (measured as forward citations), than leveraging knowledge from related, and even unrelated domains (albeit to less extent). Moreover, when the leveraged knowledge is external, this improve inventive impact for all types of knowledge domains