Technology Innovation Paradox: The Causes and Solutions

Technology innovation is one of the primary drivers of economic growth and wealth creation and a source of sustainable competitive advantage. Most innovations involve the recombination of existing knowledge. Previous studies on technology innovation have highlighted the importance of cross-industry technology transfer to drive innovation. However, there is lack of research on the situation where innovative technology developed in an industry, fails to significantly impact the industry while having a substantial influence when applied in another industry. This situation is defined in this study as the Technology Innovation Paradox. This study investigates the “Technology Innovation Paradox” by analyzing patent data to identify cases where technologies considered outdated and ineffective in one industry bring forth an extensive growth in other industries when transferred. The root cause of this paradox lies in the tendency of established industries to focus on constrained technology for product differentiation or premium features rather than on marginal technology, while other industries identify and adopt the marginal technologies developed through such investments, integrating them into their products. Since these industries are utilizing already-developed innovations, they can achieve significant growth with relatively low investment. This study contributes to literature by conceptualizing the paradoxical situation for future research.