The Next Generation: Technology Adoption and Integration through Internal Competition in New Product Development

Abstract

This paper examines the impact of internal competition that occurs when new technology challenges the technology in a firm's existing products. New-technology development projects are traditionally judged by market success - and most fail. If we examine their impact on existing-technology product development, a different interpretation arises. Drawing on the literature on the influence of social factors on interfirm search and adoption of new technologies, this study argues that similar processes occur intrafirm. Evidence from a field study on new-technology product development in high-technology firms shows that internal competition influences existing-technology product development groups to integrate the new technology into the next generation of their own products. The reason is twofold. First, these groups shift their search toward the new technology and allocate resources to gain a deeper understanding of it. Second, access to internal information and the mobility of workers across project boundaries benefit the existing-technology groups. The findings provide a model of innovation that illustrates an endogenous process of internal competition. This often political and contentious process can have a strong influence on technology adoption and integration.

Keywords: innovation, technology, new product development, cognition, learning

JEL Classification: L20, O31, O30, O32