Motivation and Ability? A Behavioral Perspective on the Pursuit of Radical Invention in Multi-Technology Incumbents

Abstract

We examine the role of incumbent firms in developing radical technologies, distinguishing between their motivation and ability to develop radical inventions. We argue that the motivation to pursue radical invention will be strongest when performance is moderately below aspiration, and will weaken as performance either falls substantially below aspiration or rises substantially above aspiration. At the same time, ability will increase with performance, resulting in a behavioral mismatch between ability and motivation-firms overinvest in radical invention when performance is moderately below aspiration and underinvest when performance is substantially above aspiration, with these effects being stronger for broad, multi-technology firms. We show empirical support for our arguments using patent data, using an empirical approach that distinguishes the potential radicalness of an invention from its eventual success. Our study highlights the role of established firms as a source of radical technologies, and examines the behavioral biases that may limit firms from pursuing competenceenhancing radical technologies.

Technological Diversification: A Systematic Review of Antecedents, Outcomes and Moderating Effects

“…Recent work has explored how TMT heterogeneity (Ndofor et al . ), as well as managerial knowledge and motivation (Eggers and Kaul ), interact with technological diversification. Future research should continue this line of enquiry by exploring the way senior managers’ human capital (Hitt et al .…”

“…; Lai and Weng ), as well as interactions between technological diversification and inter‐firm collaboration (Hohberger et al . ) and prior performance (Eggers and Kaul ).…”

“…In Phase 4, scholars increasingly became interested in the role of contextual factors (Kim et al 2009(Kim et al , 2016Shin 2010). Research began to focus on the moderating effects of resource and portfolio characteristics (Kim et al 2009(Kim et al , 2016 and organizational slack (Chen et al 2013;Lai and Weng 2014), as well as interactions between technological diversification and inter-firm collaboration (Hohberger et al 2015) and prior performance (Eggers and Kaul 2018).…”

“…Technological diversification has also been found to affect positively the relationship between external investments and knowledge transfer Wadhwa and Kotha 2006). Although technological diversification stretches managers' knowledge and capabilities, the likely increase in competitive pressures between the firm's technological areas, together with the risk-balancing effect of the wider technological portfolio, may make attempts at radical invention more likely (Eggers and Kaul 2018). Technological diversification can therefore strengthen the negative relationship between a firm's below-expectations performance and the likelihood it will pursue radical invention (Eggers and Kaul 2018).…”

“…The third phase broadened the scope of the field beyond financial performance to explore other outcomes, mainly innovation (Leten et al 2007;Quintana-García and Benavides-Velasco 2008). In the fourth and most recent phase, research has focused on moderating effects (Eggers and Kaul 2018;Kim et al 2016).…”