Discontinuous Technological Change Research Articles

Adapting to discontinuous technological change from the perspective of knowledge management: a case study from the lighting industry in Lin’an, China

PurposeThis study aims to answer the question of how incumbent firms cultivate dynamic capabilities through knowledge management so that they can efficiently adapt to the changing external environment.Design/methodology/approachThis study adopts a case study approach and collects data through interviews and secondary public information on the lighting industry and two lighting firms in Lin'an, China. It qualitatively examines the challenges and strategic recommendations for incumbent firms in the context of discontinuous technological change from a knowledge management perspective.FindingsIncumbent firms often face a variety of challenges when responding to discontinuous technological change. These challenges include identifying opportunities, overcoming path dependence and dealing with employee resistance to change. To overcome these difficulties, three strategies have been proposed to enhance the dynamic capabilities of incumbent firms through knowledge management: cross-border search helps firms improve their knowledge acquisition capabilities and better understand their environment to identify opportunities; building strategic leadership overcomes path dependence and improves knowledge integration capabilities; organizational learning deepens employees’ understanding of change and enhances organizational knowledge application capabilities.Research limitations/implicationsPrevious research attributes a firm's ability to cope with discontinuous technological change solely to its general resources, which weakens the importance of knowledge management in this context. This study emphasizes the importance of knowledge as a crucial strategic resource in developing the essential dynamic capabilities for incumbent firms to cope with discontinuous technological change.Practical implicationsThis study provides an in-depth analysis of incumbent firms' coping strategies in the new context of discontinuous technological change and further promotes cross-disciplinary research.Originality/valueThis study provides an in-depth analysis of coping strategies in the new context of discontinuous technological change, furthermore theoretically advancing the interdisciplinary research of firm transformation and knowledge management. Meanwhile, it is crucial to identify the preconditions for cultivating dynamic capabilities, especially from a knowledge-based view, which enhances the depth of knowledge management research.

A growth model with endogenous technological revolutions and cycles

We propose a new approach to deal with continuous time dynamic model with discontinuity, by which we incorporate gradual innovations and technological leaps, as well as endogenous cycles and long-run growth into one framework. We show that the optimal or equilibrium growth path is a cyclic growth path (CGP) and we develop the mathematical technique to prove the existence and uniqueness of the solution. We provide two basic setups to include the technological leaps in the R&D sector or goods production sector respectively. The growth paths under these two setups show different cyclic features and abundant economic dynamics. Our approach can be easily utilized to evaluate the optimality of the timing of the technological revolution. In the decentralized economy, the technological breakthrough is exogenous to families and always happens too late. The social planner’s problem clarifies two fundamental effects on the optimal growth path, i.e., the “dividend effect” and the “swot-up effect”, induced by discontinuous technological change. Our framework can also serve as a workhorse to address dynamic economic problems with discontinuity.

Joining forces to create value: The emergence of an innovation ecosystem

During periods of discontinuous technological change (DTC), firms seek alliances to obtain new resources and competences. The concept of innovation ecosystems is increasingly used to address joint value creation endeavours. Interactions within an innovation ecosystem are typically organized around a technology platform consisting of shared assets, standards, and interfaces. Yet, few empirical studies explain how innovation ecosystems emerge. Based on a longitudinal case study of autonomous drive technology development at Volvo Car Group, this paper aims at showing how alliances for developing a new technology leads to the emergence of an innovation ecosystem. In the context of a DTC, the paper underlines how the initial resource constraints can be a blessing in disguise that drives a firm to seek new alliances. We identify that the alliances had a significant influence on the technology platform, transitioning it from an internal to a modular technology platform. This triggered the emergence of an innovation ecosystem, consisting of actors co-creating value and organizing around the technology platform. Further, the paper highlights the subtle distinction between modularization for outsourcing and modularization for co-creating value.

Measuring technological uncertainty and technological complexity: scale development and an assessment of reliability and validity

PurposeTechnological uncertainty and technological complexity are the two dominant characteristics of new product development (NPD) projects that have a negative influence on NPD performance, relying on a strong theoretical argumentation based on organizational information processing theory. The purpose of this study is the development of reliable and valid scales for the measurement of technological uncertainty and technological complexity, especially in the context of the discontinuous technological change of digitization.Design/methodology/approachThis study uses material from 44 in-depth interviews, which has been transferred into a questionnaire, and survey data from 166 respondents from the German automotive industry in charge of the development and production of electric and electronic technologies (including software). In this context, exploratory and confirmatory factor analyses are used to test the developed scales for reliability and validity.FindingsIn this context, it can be stated that the developed scales affirm reliability and validity sufficiently. Interestingly, novelty, regarded as key item for measuring technological uncertainty, has to be dropped, as the factor loadings are under the cut-off of 0.40. Moreover, resulting items for measuring technological uncertainty and technological complexity do not deviate significantly from those discussed in previous study before the discontinuous technological change of digitization occurred.Originality/valueThis paper provides value for the discussion on how to measure technological uncertainty and technological complexity, especially in times of radical technological changes.

The Main Street Dilemma: How Journalists Cover Incumbents’ Adoption of Discontinuous Technologies

Scholars investigating incumbent inertia have recently begun to examine the role that external constituents play in incumbents’ adoption of discontinuous technologies. However, this research stream has primarily focused on the role of securities analysts and investors while neglecting other important constituents, particularly journalists. We expand the literature by empirically examining how incumbents’ adoption efforts affect coverage by journalists based on a rich sample of 352 product launches in the automotive and photography industries. We find evidence that, in contrast to financial-market-oriented constituents, journalists dedicate more attention to technological initiatives the higher the extent of discontinuity, but also cover them more controversially. We also find an important distinction among different types of hybrid technologies. Specifically, journalists perceive hybrid technologies that try to establish a technological alternative to the discontinuous technology as more controversial than hybrid technologies introduced to ease the transition to the discontinuous technology. Overall, our study provides a more nuanced understanding of infomediary responses to discontinuous technological change. Most importantly, we highlight that incumbents are not only confronted with evaluation challenges from Wall Street, as has previously been highlighted, but also face distinct pressures from Main Street, particularly as journalists cover discontinuities more controversially.

A new perspective on open innovation: established and new technology firms in UK bio‐pharmaceuticals

The aim of this paper is to explore open innovation (OI) implementation and its impact on firm innovation performance in sectors experiencing technological discontinuities. The paper employs the framework of inbound, outbound and coupled OI to identify processes reflecting sourcing, externalising and exchanging knowledge across organisational boundaries on upstream and downstream innovation activities and explores their impact on the innovation performance of new and established technology firms. The empirical setting is the UK bio‐pharmaceuticals sector during 1991 and 2001, a paradigmatic era of discontinous change and intensified OI implementation. First, our findings show that new technology firms (NTFs) and established technology firms (ETFs) differ in their extent and patterns of inbound, outbound and coupled OI, reflecting that they implement OI to manage their competences in light of technological change. Second, we identify a complex and multifaceted relationship between OI and patenting performance, with NTFs experiencing enhanced performance from some OI processes while ETFs experiencing challenges. The paper suggests that delineating OI into inbound, outbound and coupled, along upstream and downstream activities, offers a deeper understanding of the role of OI in innovation, guiding selective implementation in pursuing enhanced innovation performance during periods of discontinuous technological change.

Putting choice in the spotlight to advance theory on organizational adaptation to technological discontinuities

Purpose This paper aims to develop and argue for a new research path to advance theory on incumbent firm adaptation to discontinuous technological change. Integrating variance and process epistemologies, implications of distinguishing a firm's capacity to adapt from their adaptive choices are highlighted. Design/methodology/approach The concepts and argument presented are based on an extensive review and synthesis of the literature on the phenomenon. Findings Distinguishing resource-based capacity variables and behavioral-based choice variables can fuel progress in the literature on incumbent adaptation to technological changes. More attention is needed on the direct, proximate determinants of what occurs in the process of adaptation, e.g. the intermediate choices to adapt, the timing of adaptive actions and the selection of a means for adapting. Work must then associate specific choices with performance outcomes to complete both sides of the mediated cause-effect model connecting characteristics of the decision issue to performance. Originality/value Most studies toward understanding how incumbent firms adapt to discontinuous technological innovation have used variance analyses to identify firm and technology characteristics that explain adaptation outcomes. Focusing on characteristics and content, however, does not adequately explain why or how firms adapt. Scholars thus continue to lament the lack of clear, practical theory. I contend one heretofore unaddressed reason for this dissatisfaction is that too much of the research base neglects the importance of understanding choices and the factors affecting them.

How mixed ownership affects decision making in turbulent times: Evidence from the digital revolution in telecommunications

This study examines how the ownership structure of corporations shapes their responses to discontinuous technological change. We analyze whether mixed ownership, a situation where following privatization a company's shares are held both privately and by the government, is associated with less innovation in response to discontinuous technological change. We argue that mixed ownership is associated with governance conflicts that affect a company's ability to respond to the challenges posed by discontinuous technological change. Our empirical analysis uses data on European telecommunications operators for the period 2000–2016 when they faced sweeping technological change due to the advent of Internet-based communication services. Our baseline result suggests that operators with mixed ownership file around 70% fewer patents in relevant digital technologies than companies that are fully private or where the government owns a majority of shares. We find that mixed ownership also affects negatively the acquisition of externally developed technology.

Technology Rhetoric: Incumbents’ Strategic Public Language During Discontinuous Change

We combine research on discontinuous technological change and impression management to explore how and why incumbents’ strategic public language affects the resistance of external constituents agai...

A new perspective on the innovator's dilemma - exploring the role of entrepreneurial incentives

Why do entrant firms sometimes gain the upper hand under conditions of discontinuous technological change? Previous research on this topic has either looked at the role of established competencies and/or firm incentives to invest in a new technology. In this paper we explore an alternative explanation. Drawing upon evidence from the ongoing transition from CCTV to digital, IP-based video surveillance, we argue that entrant firms may be more prone to act entrepreneurially, i.e., more inclined to proactively create or transform markets and build ecosystems. As new technologies frequently require altered behaviour among customers and stakeholders, this capability is sometimes critical in order to succeed in a technological transition. Our contribution therefore lies in pointing out that not only may incentives to allocate R&D resources differ among entrants and incumbents, firms might also have different incentives to engage in entrepreneurial activities of creating or transforming markets.

A new perspective on the innovator's dilemma - exploring the role of entrepreneurial incentives

Why do entrant firms sometimes gain the upper hand under conditions of discontinuous technological change? Previous research on this topic has either looked at the role of established competencies and/or firm incentives to invest in a new technology. In this paper we explore an alternative explanation. Drawing upon evidence from the ongoing transition from CCTV to digital, IP-based video surveillance, we argue that entrant firms may be more prone to act entrepreneurially, i.e., more inclined to proactively create or transform markets and build ecosystems. As new technologies frequently require altered behaviour among customers and stakeholders, this capability is sometimes critical in order to succeed in a technological transition. Our contribution therefore lies in pointing out that not only may incentives to allocate R&D resources differ among entrants and incumbents, firms might also have different incentives to engage in entrepreneurial activities of creating or transforming markets.

Major transitions in information technology.

When looking at the history of technology, we can see that all inventions are not of equal importance. Only a few technologies have the potential to start a new branching series (specifically, by increasing diversity), have a lasting impact in human life and ultimately became turning points. Technological transitions correspond to times and places in the past when a large number of novel artefact forms or behaviours appeared together or in rapid succession. Why does that happen? Is technological change continuous and gradual or does it occur in sudden leaps and bounds? The evolution of information technology (IT) allows for a quantitative and theoretical approach to technological transitions. The value of information systems experiences sudden changes (i) when we learn how to use this technology, (ii) when we accumulate a large amount of information, and (iii) when communities of practice create and exchange free information. The coexistence between gradual improvements and discontinuous technological change is a consequence of the asymmetric relationship between complexity and hardware and software. Using a cultural evolution approach, we suggest that sudden changes in the organization of ITs depend on the high costs of maintaining and transmitting reliable information.This article is part of the themed issue 'The major synthetic evolutionary transitions'.

Business model innovations in times of long-term discontinuous technological change - an empirical examination of the automotive industry in transition to electric mobility

Business model innovations, as adjustments of business models to changes in the environment, are currently being studied mainly from the process point of view. So far, an examination of the content of decisions to innovate business models and their components (i.e., resource allocation, competitive advantages, value architecture, customer value proposition and profit model) has been largely neglected. Nevertheless, they are very important particularly in the event of long-term discontinuous technological changes where the transition to the new technology takes so long that widely differing business models are possible simultaneously. To investigate such differing business model innovations, hypotheses on the adaptation of business models are formed on the basis of a variety of explanatory approaches, particularly the competence-based view, and studied in scenario-based experiments at 52 German automotive companies in the transition to electric mobility. With these experiments decisions on business models, especially alternative paths for innovating business model components can be identified (technology embracing, technology balancing and technology postponing).

An Attention‐Based View of Family Firm Adaptation to Discontinuous Technological Change: Exploring the Role of Family CEOs' Noneconomic Goals

Recent studies show that managerial attention is a particularly important precursor of established firms' responses to discontinuous technological change. However, little is known about the factors that shape managerial attention‐response patterns. Our qualitative study investigates how the attention of family firm chief executive officers (CEOs) to discontinuous technological shifts, the interpretation and decision‐making processes associated with these changes, and ultimately organizations' responses are affected by CEOs' noneconomic goals. Based on seven longitudinal case studies in the German consumer goods industry, the paper induces a process model that extends the findings of the literature on the attention‐based view and helps to explain heterogeneity in family firms' adaptation to discontinuous technological change. This study shows that the family CEO's specific noneconomic goals—such as power and control, transgenerational value, the maintenance of family reputation, the continuance of personal ties, or personal affect associated with the family business—determine whether the CEO assesses an emerging technology as relevant enough to warrant a reaction from the firm. Moreover, the family CEO's noneconomic goals constrain the set of considered responses. The outcome of this sensemaking process determines the organization's response. For instance, in the specific context of this study, the goal of “family power and control” entailed an immediate interpretation of the focal trend as important for maintaining influence, and resulted in an unconstrained set of responses and, ultimately, high innovation in the new domain. Over time, family CEOs might reevaluate the emerging trend based on their goals and adapt organizational moves accordingly. The paper identifies and discusses how ambiguities and dilemmas may arise during this process. Our findings contribute to the literature on adaptation to discontinuous technological change and to family firm research.

Top Management’s Attention to Discontinuous Technological Change: Corporate Venture Capital as an Alert Mechanism

Technological discontinuities pose serious challenges to top managers’ attention. These discontinuities, which often occur at the fringes of an industry, are usually driven by innovative and (often) venture capital-backed start-ups creating new products and transforming existing industries in ways that are difficult for incumbent managers to understand against the backdrop of their existing cognitive schemata. However, failing to appreciate and embrace successful technological discontinuities might endanger incumbents’ very existence. Extending the attention-based view, we explore whether and how interorganizational relationships guide top managers’ attention either to or away from technological discontinuities. We propose that homophilous relationships (e.g., alliances with industry peers) should exhibit a negative relationship with incumbents’ timely attention to technological discontinuities, whereas heterophilous relationships (e.g., with venture capitalists as a result of coinvestments) should exhibit a positive relationship. Furthermore, we hypothesize that the status of the partners strengthens the effect of homophilous and heterophilous relationships with the timely attention of top managers to technological discontinuities. Based on a longitudinal study of the incumbents in four information and communications technology industry sectors, we find that heterophilous ties through corporate venture capital (CVC), coinvesting with high-status venture capital firms, exhibit a strong positive relationship with timely attention. CVC, when it connects senior management to high-status venture capitalists through coinvestments, has a special role in directing top managers’ attention to technological discontinuities and ensuing business opportunities. Implications for the understanding of the role of interorganizational ties as structural determinants of top managers’ attention are discussed.

Technological discontinuities and the challenge for incumbent firms: Destruction, disruption or creative accumulation?

The creative destruction of existing industries as a consequence of discontinuous technological change is a central theme in the literature on industrial innovation and technological development. Established competence-based and market-based explanations of this phenomenon argue that incumbents are seriously challenged only by ‘competence-destroying’ or ‘disruptive’ innovations, which make their existing knowledge base or business models obsolete and leave them vulnerable to attacks from new entrants. This paper challenges these arguments. With detailed empirical analyses of the automotive and gas turbine industries, we demonstrate that these explanations overestimate the ability of new entrants to destroy and disrupt established industries and underestimate the capacity of incumbents to perceive the potential of new technologies and integrate them with existing capabilities. Moreover, we show how intense competition in the wake of technological discontinuities, driven entirely by incumbents, may instead result in late industry shakeouts. We develop and extend the notion of ‘creative accumulation’ as a way of conceptualizing the innovating capacity of the incumbents that appear to master such turbulence. Specifically, we argue that creative accumulation requires firms to handle a triple challenge of simultaneously (a) fine-tuning and evolving existing technologies at a rapid pace, (b) acquiring and developing new technologies and resources and (c) integrating novel and existing knowledge into superior products and solutions.

Incumbents’ Overlooked Role in Discontinuous Technological Change in the US Newspaper Industry

This paper focuses on incumbents? reactions to discontinuous technological change and examines the relationship between the way in which incumbents respond to discontinuous change at the product-feature level and their adoption performance in the U.S. newspaper industry. I argue that incumbent firms can improve adoption performance by emphasizing product-feature similarity, which is defined as co-option in this paper. By co-opting technological change, incumbents are more likely to be acceptable to external audiences and in turn, can make their current assets more valuable and appropriable in the new market. Consequently, they can be more successful in shaping an ex ante discontinuous technological change into an ex post less discontinuous one. Fixed-effects panel regression analyses from 2002 to 2012 support my theoretical arguments: newspapers that deemphasized interactivity on the web, the characteristic that most distinguish digital media from print media, had higher online and net-combined readerships. Furthermore, the effect of co-option on readerships increased over time, which could potentially create a ?print-media-like? digital media.

Shift in Value Creation: Competence-destroying Discontinuity on Complementary Assets

Literature on discontinuous technological change has highlighted the strategic implications of value creation and value appropriation for incumbent firms and new entrants. This paper contributes to...

Creative Accumulation and Disruptive Innovation: Contrasting Cases of Discontinuous Industry Change

An influential perspective on industrial innovation has focused on the impact of discontinuous technological change on existing industry structures. This perspective has showed how periods of incre...

Was technological change in the early Industrial Revolution Schumpeterian? Evidence of cotton textile profitability

Price and profit data between the 1770s and the 1820s from accounting records of three Lancashire cotton firms help to illumine the nature of the economic processes at work in early industrialization. Many historians have seen the Industrial Revolution as a Schumpeterian process in which discontinuous technological change led by the mechanized factories of the cotton industry created large profits for innovators that persisted in succeeding decades while technology slowly diffused. In this view imperfect capital markets limited the use of the new technology, keeping profits high. Reinvestment of these profits gradually financed expansion of innovating firms. The new technology dominated only after a long diffusion process. The evidence here, however, supports a more equilibrium view in which the industry expanded rapidly and prices fell in response to technological change. Expansion of the industry led to dramatic declines in the prices of cotton goods as early as the 1780s. There is no evidence of super-normal profits thereafter. Prices continued to fall and output expand thereafter as cost-reducing technological change continued.