The Dynamics of Learning and Competition in Schumpeterian Environments

Forthcoming at Organization Science

59 Pages Posted: 3 Jun 2019

See all articles by Gianluigi Giustiziero

Gianluigi Giustiziero

Frankfurt School of Finance & Management

Aseem Kaul

University of Minnesota - Minneapolis

Brian Wu

University of Michigan, Stephen M. Ross School of Business

Date Written: May 11, 2019

Abstract

In this study, we examine the nature of Schumpeterian competition between entrants and incumbents. We argue that incumbents may respond to the threat of entry by either attacking the entrant or trying to learn from it, and that entrants, in turn, may react by either reciprocating the incumbent’s advances or retreating from it. Putting these competitive choices together, we develop a framework of four distinct potential scenarios of Schumpeterian competition. In particular, we emphasize a scenario we term creative divergence, wherein incumbents try to learn from entrants and build on their technologies, but their investments to do so cause entrants to retreat, resulting in diminishing returns to learning investments by incumbents. Exploratory analyses of the US cardiovascular medical device industry find patterns consistent with the creative divergence scenario, with incumbent knowledge investments helping them to learn from entrants, but these learning benefits being undermined as entrants move away from incumbents.

Keywords: competitive dynamics, evolutionary theory, absorptive capacity, Schumpeterian environments, creative divergence, knowledge spillovers

JEL Classification: D4, L1, M1, M13

Suggested Citation

Giustiziero, Gianluigi and Kaul, Aseem and Wu, Brian, The Dynamics of Learning and Competition in Schumpeterian Environments (May 11, 2019). Forthcoming at Organization Science, Available at SSRN: https://ssrn.com/abstract=3386702

Gianluigi Giustiziero (Contact Author)

Frankfurt School of Finance & Management ( email )

Adickesallee 32-34
Frankfurt, 60322
Germany
60322 (Fax)

Aseem Kaul

University of Minnesota - Minneapolis ( email )

321, 19th Avenue S
3-412 Carlson School of Management
Minneapolis, MN 55455
United States

Brian Wu

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

701 Tappan Street
Ann Arbor, MI MI 48109
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
31
Abstract Views
275
PlumX Metrics