Published April 15, 2024 | Version v1
Publication Open

Too close for comfort: the pitfall of incumbents' knowledge search during industry evolution

  • 1. ROR icon University of Stuttgart

Description

Innovation shocks combine technology and market disruptions. They can lead to a complete overhaul of an industry. Building on prior work on firm-level responses to technological uncertainty, we propose and explore a model to explain R&D behavior under uncertainty. We theorize that industry incumbents adjust their knowledge search as the innovation shock unfolds, reacting to the perceived sources of uncertainty. We use a unique combination of two decades (2000–2020) of patent data and archival news to (1) identify the industry evolution stages as the shock unfolds and (2) map the firm's knowledge search response. Our analysis of three leading car manufacturers exposed to the emergence of the electric vehicle shows the path-dependency effects that delay the incumbents’ adjustment of their innovation direction, even after the shock becomes visible. We extract insights for R&D managers by making evident the long-lasting effects of prior R&D decisions, impeding their reaction to a shock and reducing their capability to integrate newly available knowledge.

Files

R D Management - 2024 - Tryggvason - Too close for comfort the pitfall of incumbents knowledge search during industry.pdf

Additional details

Funding

EINST4INE – European Training Network for InduStry Digital Transformation across Innovation Ecosystems 956745
European Commission