Competing Technologies and Industry Evolution: The Benefits of Making Mistakes in the Flat Panel Display Industry
Forthcoming, Strategic Management Journal
41 Pages Posted: 11 Feb 2009 Last revised: 4 Sep 2014
Date Written: August 28, 2012
This paper investigates the post-entry implications of pre-entry technological choices made during the uncertain period before a dominant design. Building on work on technological dynamics and organizational inertia, I argue that too early commitments to the winning technology may impede the ability to bring the best product to market, but delaying investment too long limits the ability to accumulate useful knowledge. Using data from the evolution of the flat panel display industry from 1965-2005, the study shows empirical support for the two theoretical mechanisms, and offers the surprising result that firms starting in the losing technology before switching outperform other firms in terms of product value. Switching, while difficult behaviorally in recovering from failure, both delays difficult-to-reverse technological commitments and develops market knowledge.
Keywords: competing technologies, pre-entry experience, organizational inertia, technological evolution, flat panel displays
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