Unveiling the Successful Process of Technological Transition : A Case Study of Matsushita Electric

Changing technological strategies requires serious management decisions because it essentially means withdrawing from an existing technology, in which the company has been successful, and shifting management resources to a new technology with a high degree of uncertainty. Most of existing research has focused on examples of failure, to shed light on the causes of failure. However, we will analyze in detail an example of a successful transition to a new technology. The subject of our analysis is the transition in technological strategies made by Matsushita Electric Group (MEG), a large corporate group representative of Japanese companies, at the time of its commercialization of plasma TVs. The purpose of this paper is to analyze in detail this transition process and to discover findings and insights for successful transition process from accumulated technology to new technology. Our analysis yields key conceptual contributions about technological transition from old to new technology as follows. Old and new technology can differ in their knowledge base. According to existing literature, when the knowledge base is radically different, incumbent firms have a difficulty adapting to the technological change. On the other hand, when the knowledge base is very similar, incumbent firms have no trouble adapting to the change. Beyond these established existing understandings, this paper argues that when the knowledge base is moderately different, managers can increase the likelihood of successful transition by implementing a set of organizational strategies. Among these strategies, a particularly insightful one is that through the parallel development process of both existing and new technologies, managers can eventually integrate the advantages of both technologies by implementing a flexible resource allocation mechanism to overcome the dichotomy between old and new.