IDEAS home Printed from https://ideas.repec.org/p/esm/wpaper/esmt-08-002.html
   My bibliography  Save this paper

Legacy effects in radical innovation: A study of European Internet banking

Author

Listed:
  • Erik H. Schlie

    (ESMT European School of Management and Technology)

  • Jaideep C. Prabhu

    (Tanaka Business School, Imperial College London)

  • Rajesh K. Chandy

    (Carlson School of Management, University of Minnesota)

Abstract

How do firms cope with the challenges of disruptive change in their industry? Numerous studies have highlighted that success with any prior technology creates a negative legacy effect for the next radical technological shift. We question the overly pessimistic view of such legacy effects and ask how quickly firms embrace technological breakthroughs by radically innovating and who wins in the longer term? In this paper, we argue that legacy is a multi-faceted construct whose diverse aspects could simultaneously have different effects on innovation speed and market performance. We identify three main types of legacy related to technology, organizational, and country-level influences. Previous research tends to focus on technological or market effects in isolation, whereas we seek to study the effects of both firm and country legacy simultaneously on speed to radical innovation and market performance over time. Based on a conceptual framework we develop six hypotheses concerning the legacy effects on initial speed radical innovation and subsequent market performance. We chose the European retail banking industry and the focal innovation of transactional Internet banking as a suitable empirical context to employ quantitative hypothesis testing. Detailed and longitudinal (1996-2001) data were collected for a sample of 123 banks from six European countries: United Kingdom, Germany, France, Sweden, Finland, and Denmark. We specified a model and used threestage least squares (3SLS) as a method to estimate simultaneous regression equations due to endogeneity of a key variable. We show that the prevailing negative view of legacies is likely to be overstated.

Suggested Citation

  • Erik H. Schlie & Jaideep C. Prabhu & Rajesh K. Chandy, 2008. "Legacy effects in radical innovation: A study of European Internet banking," ESMT Research Working Papers ESMT-08-002, ESMT European School of Management and Technology.
  • Handle: RePEc:esm:wpaper:esmt-08-002
    as

    Download full text from publisher

    File URL: http://static.esmt.org/publications/workingpapers/ESMT-08-002.pdf
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    innovation; legacy; internet banking; europe;
    All these keywords.

    JEL classification:

    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:esm:wpaper:esmt-08-002. 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: (ESMT Faculty Publications). General contact details of provider: https://edirc.repec.org/data/emstbde.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.