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Old technology responses to new technology threats: demand heterogeneity and technology retreats

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  • Ron Adner
  • Daniel Snow

Abstract

We explore the implications of a real and common alternative to attempting the transformation required to embrace a new, dominant, technology--the choice to maintain focus on the old technology. In considering this choice, we distinguish between "racing" strategies, which attempt to fight off the rise of the new technology by extending the performance of the old technology, and "retreat" strategies, which attempt to accommodate the rise of the new technology by repositioning the old technology in the demand environment. Underlying our arguments is the observation that the emergence of a new technology does more than just create a substitute threat--it can also reveal significant underlying heterogeneity in the old technology's broader demand environment. This heterogeneity is a source of opportunities that can support a new position for the old technology, in either the current market or a new one. Using this lens, we explore the decision to stay with the old technology as a rational, proactive choice rather than as a mark of managerial and organizational failure. We then consider the distinctive challenges and organizational dynamics that arise in technology retreats, and their implications for the ways in which managers and scholars should approach questions regarding the management of capabilities, lifecycles, and ecosystems. Copyright 2010 The Author 2010. Published by Oxford University Press on behalf of Associazione ICC. All rights reserved., Oxford University Press.

Suggested Citation

  • Ron Adner & Daniel Snow, 2010. "Old technology responses to new technology threats: demand heterogeneity and technology retreats," Industrial and Corporate Change, Oxford University Press, vol. 19(5), pages 1655-1675, October.
  • Handle: RePEc:oup:indcch:v:19:y:2010:i:5:p:1655-1675
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    File URL: http://hdl.handle.net/10.1093/icc/dtq046
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    Cited by:

    1. Raja Roy & MB Sarkar, 2016. "Knowledge, firm boundaries, and innovation: Mitigating the incumbent's curse during radical technological change," Strategic Management Journal, Wiley Blackwell, vol. 37(5), pages 835-854, May.
    2. repec:eee:tefoso:v:125:y:2017:i:c:p:166-177 is not listed on IDEAS
    3. Ma, Daw & Chang, Chia-Chin & Hung, Shiu-Wan, 2013. "The selection of technology for late-starters: A case study of the energy-smart photovoltaic industry," Economic Modelling, Elsevier, vol. 35(C), pages 10-20.
    4. Oomens, Ivette M. F. & Sadowski, Bert M., 2017. "The importance of value creation in smart city initiatives: An ecosystem approach," 28th European Regional ITS Conference, Passau 2017 169491, International Telecommunications Society (ITS).
    5. Gebauer, Judith & Mahoney, Joseph T., 2013. "Joining Supply and Demand Conditions of IT Enabled Change: Toward an Economic Theory of Inter-firm Modulation," Working Papers 13-0100, University of Illinois at Urbana-Champaign, College of Business.
    6. repec:wsi:ijimxx:v:21:y:2017:i:02:n:s1363919617500189 is not listed on IDEAS
    7. Siqueira, Ana Cristina O. & Priem, Richard L. & Parente, Ronaldo C., 2015. "Demand-side Perspectives in International Business: Themes and Future Directions," Journal of International Management, Elsevier, vol. 21(4), pages 261-266.
    8. JP Eggers & Michal Grajek & Tobias Kretschmer, 2011. "Performance implications of core and complementary pre-entry experience: The role of consumer heterogeneity in mobile telephony," ESMT Research Working Papers ESMT-11-03 (R2), ESMT European School of Management and Technology, revised 29 May 2012.
    9. Walrave, Bob & Raven, Rob, 2016. "Modelling the dynamics of technological innovation systems," Research Policy, Elsevier, vol. 45(9), pages 1833-1844.
    10. repec:eee:tefoso:v:129:y:2018:i:c:p:314-322 is not listed on IDEAS
    11. Claussen, Jörg & Essling, Christian & Kretschmer, Tobias, 2015. "When less can be more – Setting technology levels in complementary goods markets," Research Policy, Elsevier, vol. 44(2), pages 328-339.
    12. Madureira, Nuno Luis, 2012. "The iron industry energy transition," Energy Policy, Elsevier, vol. 50(C), pages 24-34.
    13. Rietveld, G.J. & Eggers, J.P., 2016. "Demand Heterogeneity and the Adoption of Platform Complements," ERIM Report Series Research in Management ERS-2016-003-STR, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    14. Caterina Tantalo & Richard L. Priem, 2016. "Value creation through stakeholder synergy," Strategic Management Journal, Wiley Blackwell, vol. 37(2), pages 314-329, February.

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