Choosing Technology: An Entrepreneurial Strategy Approach

34 Pages Posted: 21 Jul 2020

See all articles by Joshua S. Gans

Joshua S. Gans

University of Toronto - Rotman School of Management; NBER

Michael Kearney

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Erin Scott

MIT Sloan School of Management

Scott Stern

Massachusetts Institute of Technology (MIT) - Sloan School of Management; National Bureau of Economic Research (NBER)

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Date Written: June 25, 2020

Abstract

A central premise of research in the strategic management of innovation is that start-ups are able to leverage emerging technological trajectories as a source of competitive advantage. But, if the potential for a technology is given by the fundamental character of a given technological trajectory, then why does entrepreneurial strategy matter? Or, put another way, if the evolution of technology is largely shaped by the strategic choices entrepreneurs make, then why do technological trajectories exhibit systematic patterns such as the Technology S-curve? Taking a choice-based perspective, this paper illuminates the choices confronting a start-up choosing their technology by resolving the paradox of the Technology S-curve through a reformulation of the foundations of the Technology S-curve. Specifically, we reconceptualize the Technology S-curve not as a technological given but as an envelope of potential outcomes reflecting differing strategic choices by the entrepreneur in exploration versus exploitation. Taking this lens, we are able to clarify the role of technological uncertainty on start-up strategy, the impact of constraints on technological evolution, and how technology choice is shaped by the possibility of imitation. Our findings suggest that staged exploration may stall innovation as a result of the replacement effect, increasing the strategic importance of commitment.

Keywords: S-curve, entrepreneurial strategy, exploitation, exploration

JEL Classification: O31

Suggested Citation

Gans, Joshua S. and Kearney, Michael and Scott, Erin and Stern, Scott, Choosing Technology: An Entrepreneurial Strategy Approach (June 25, 2020). Rotman School of Management Working Paper No. 3637465, Available at SSRN: https://ssrn.com/abstract=3637465 or http://dx.doi.org/10.2139/ssrn.3637465

Joshua S. Gans (Contact Author)

University of Toronto - Rotman School of Management ( email )

Canada

HOME PAGE: http://www.joshuagans.com

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Michael Kearney

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

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Erin Scott

MIT Sloan School of Management ( email )

Cambridge, 117592
United States

Scott Stern

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

Cambridge, MA 02142
United States
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National Bureau of Economic Research (NBER)

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United States

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