Transition Strategies for Managing Technological Discontinuities: Lessons from the History of the Semiconductor Industry

Abstract

This paper explores the nature of competition under conditions of technological change and asks how firms can manage technological discontinuities. By drawing on the literatures on strategic management and technology dynamics it is proposed that firms should change the nature of their strategy as a technology matures. This proposition is substantiated on the basis of a historical account of the process of competition in the semiconductor industry. An analysis of competition in the wake of the four technological discontinuities that have shaped the semiconductor industry shows how critical success factors change in relation to technological change. Drawing on the lessons from the history of the semiconductor industry, a model is developed to help established firms manage the transition to a newly emerging technological regime. The paper concludes with a reflection on the nature of competition under conditions of technological change, and its implications for theory development in strategic management.

Keywords: Strategic management, technology dynamics, technology strategy, managing technological discontinuities, competitive dynamics, semiconductor industry

JEL Classification: D21, D73, L10, L21, L63, M10, O31, O32, O33