Download this Paper Open PDF in Browser

Complementary Assets as Pipes and Prisms: Innovation Incentives and Trajectory Choices

Forthcoming, Strategic Management Journal

51 Pages Posted: 7 Mar 2011 Last revised: 7 May 2013

Brian Wu

University of Michigan, Stephen M. Ross School of Business

Zhixi Wan

University of Oregon - Department of Operations and Business Analytics

Daniel Levinthal

University of Pennsylvania - Management Department

Date Written: October 1, 2012

Abstract

A long-standing interest in the technology strategy domain has been the question of the failure of incumbent firms in the face of radical technical change. We add to these prior contributions by highlighting the role a firm’s existing set of complementary assets have in influencing its investment in alternative technological trajectories. We develop an analytical model that considers firm heterogeneity with respect to both technological trajectories and complementary assets. Complementary assets play a dual role in incumbents’ investment behavior toward radical technological change: they are not only resources that can buffer firms from technology change, but also prisms through which firms view those changes, influencing both the magnitude of resources that should be invested and the trajectory to which these resources should be directed.

Keywords: Complementary assets, technology strategy, innovation incentives, complement-preserving trajectory, complement-disrupting trajectory

JEL Classification: L13, O31, O32, O33

Suggested Citation

Wu, Brian and Wan, Zhixi and Levinthal, Daniel, Complementary Assets as Pipes and Prisms: Innovation Incentives and Trajectory Choices (October 1, 2012). Forthcoming, Strategic Management Journal. Available at SSRN: https://ssrn.com/abstract=1777241 or http://dx.doi.org/10.2139/ssrn.1777241

Brian Wu (Contact Author)

University of Michigan, Stephen M. Ross School of Business ( email )

701 Tappan Street
Ann Arbor, MI MI 48109
United States

Zhixi Wan

University of Oregon - Department of Operations and Business Analytics ( email )

1208 University of Oregon
Eugene, OR 97403-1208
United States

Daniel A. Levinthal

University of Pennsylvania - Management Department ( email )

The Wharton School
Philadelphia, PA 19104-6370
United States
215-898-6826 (Phone)
215-898-0401 (Fax)

Paper statistics

Downloads
207
Rank
124,269
Abstract Views
1,392