Underinvestment and Incompetence as Responses to Radical Innovation: Evidence from the Photolithographic Alignment Equipment Industry
Neoclassical theory suggests that when an industry is shaken by radical technological change, incumbent firms will be replaced by entrants because entrants have greater strategic incentives to invest in radical innovation. Organizational theory suggests that incumbent firms fail in the face of radical innovation because they fall prey to inertia and complacency. I show that if organizational effects are significant, tests of neoclassical theory in isolation will yield spurious or noisy results. Using data derived from a detailed field study of the photolithographic alignment equipment industry, I show that as neoclassical theory predicts, established firms invested more than entrants in incremental innovation, but that in agreement with organizational theory, the research efforts of incumbents seeking to exploit radical innovation were significantly less productive than those of entrants.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 24 (1993)
Issue (Month): 2 (Summer)
|Contact details of provider:|| Web page: http://www.rje.org|
|Order Information:||Web: https://editorialexpress.com/cgi-bin/rje_online.cgi|
When requesting a correction, please mention this item's handle: RePEc:rje:randje:v:24:y:1993:i:summer:p:248-270. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.