We investigate the conditions under which managerial cognition affects the timing of incumbent entry into a radical new technological market. We address this question using a longitudinal study of communications technology firms entering the fiber-optics product market. Using a hazard rate model, we investigate the relevance of cognition based on the direction of CEO attention. We find that attention toward the emerging technology and the affected industry is associated with faster entry, and attention to existing technologies is associated with slower progress. Second, we assess the extent to which the effect of cognition is dependent upon the levels of relevant organizational factors and find that CEO attention to the emerging technology may amplify the effects of industry orientation. Managerial cognition is important in understanding organizational outcomes, and considering both the direction of cognition and its interaction with organizational factors provides a more nuanced view of entry behavior. These results contribute to the literatures on incumbent response to technical change and new product development by suggesting that context-specific managerial cognition has a separate and important influence on the degree and direction of strategic renewal. We argue that managerial cognition is therefore a dynamic managerial capability that can shape adaptation by established firms.
This study explores the contingencies relating firm experience to product development capabilities, focusing on experience type (breadth versus depth) and timing (prior versus concurrent). Results from empirical tests in the U.S. mutual fund industry offer two primary findings. First, firms increase proficiency at adapting their processes to address new opportunities as they accumulate experience in entering new niches, but face initial hurdles broadening their experience base. Second, concurrent learning is capacity constrained, as product quality increases in the number of products introduced simultaneously in one niche, but quality decreases as the firm's concurrent portfolio of new products broadens. Jointly, these findings highlight that dynamic capabilities are built through prior adaptation experience and that management of a product development portfolio is an important managerial capability.Learning, Adapting, and Focusing 317 experience. Then, after the empirical setting is introduced and the results of the analysis are discussed, the themes of dynamic capabilities and product portfolio management are revisited in the Discussion section. 2 The primary exceptions have looked at which opportunities to pursue and the sharing of (generally technical) resources across activities ('platforming').
Schumpeter famously popularized "creative destruction" as the process whereby new entrants replaced existing firms. In most cases, however, some incumbent firms survive and even thrive across technological discontinuities. Moving beyond incumbent-entrant dynamics, organizations and innovation research has begun to explore incumbent heterogeneity in response to technological change-why some incumbents do well and adapt, whereas others struggle. As a phenomenon-driven research area, scholars with different theoretical perspectives have brought their own lenses to bear, but these perspectives have evolved independently. The result is a research stream with a scattered collection of detailed, within-industry perspectives on the phenomenon without a clear ability to link different mechanisms or articulate boundary conditions. This article brings these relevant literatures together to paint a more holistic picture of incumbent adaptation to technological change. To improve generalizability and begin building a more general, cross-industry theory, we emphasize recognizing specific nuances of different technological changes and how they fit with the existing capabilities, knowledge, position, and cognition of incumbent firms to understand which incumbents are swept away in the wave of creative destruction and which may survive.
meeting, and DRUID 17. We also thank Mary Tripsas and three anonymous reviewers for their time and valuable guidance, which led to a much improved version of the paper. We acknowledge three research assistants for their data collection efforts and Andy Webb for his insights on the UK video games industry. All mistakes are our own. AbstractWhile two-sided platforms (e.g., video game consoles) depend on complements (e.g., games) for their success, the success of complements is also influenced by platform-level dynamics. Research suggests that greater platform adoption benefits complements by providing more potential users, but this assumes that platform adopters are homogeneous. We build on extensive research exploring the heterogeneity between early and late platform adopters to identify counterintuitive dynamics for complements.Complements launched early in a platform's lifecycle face an audience entirely of early platform adopters, whereas later-launching complements face a mixed audience of both early and late adopters, and we argue that differences in preferences and behavior between early and late adopters affect whether complements will succeed and which types will be most successful. We explore these dynamics in the context of the console video game industry using a unique dataset of 2,918 video games released in the United Kingdom from 2000 to 2007. We show that despite the increase in the potential user pool as the platform evolves, video games launched later in the platform lifecycle realize lower sales than those launched earlier. While increased competition explains part of this effect, we show substantial evidence consistent with our theory of preference differences between early and late adopters. This includes the finding that the negative effect is stronger for novel games and that the gap between popular and less popular complements widens as later adopters move into the platform, consistent with late adopters being risk averse and seeking to avoid purchasing mistakes.
We study four information aggregation structures commonly used by organizations to evaluate opportunities: individual decision making, delegation to experts, majority voting, and averaging of opinions. Using a formal mathematical model, we investigate how the performance of each of these structures is contingent upon the breadth of knowledge within the firm and changes in the environment. Our model builds on work in the Carnegie tradition and in the group and behavioral decision-making literatures. We use the model to explore when delegation is preferable to other structures, such as voting and averaging. Our model shows that delegation is the most effective structure when there is diversity of expertise, when accurate delegation is possible, and when there is a good fit between the firm's knowledge and the knowledge required by the environment. Otherwise, depending on the knowledge breadth of the firm, voting or averaging may be the most effective structure. Finally, we use our model to shed light on which structures are more robust to radical environmental change and when crowd-based decision making may outperform delegation. This paper was accepted by Jesper Sørensen, organizations.
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