Creating Competencies for Radical Technologies: Revisiting Incumbent-Entrant Dynamics in the Bionic Prosthetic Industry

91 Pages Posted: 3 Feb 2022 Last revised: 22 Sep 2022

See all articles by Seojin Kim

Seojin Kim

University of Maryland, Robert H. Smith School of Business

Rajshree Agarwal

University of Maryland - Robert H. Smith School of Business

Brent Goldfarb

University of Maryland - Robert H. Smith School of Business

Date Written: September 16, 2022

Abstract

We revisit incumbent-entrant dynamics by using the “nature of technology” definition of radical technological systems—the use of novel base principles to deliver a specific purpose. In doing so, we begin with the technology incubation period and address the circularity in the economic effects definition wherein incumbents are definitionally disadvantaged by radical technologies ushered by entrants. We develop a framework that maps the strategic choices and interactions of incumbents and entrants within a coevolutionary process for creation of a radical technology system and competencies, with implications for subsequent value capture strategies. We illustrate this framework through a quantitative analysis of the census of firms and a qualitative analysis of historically significant cases in the nascent bionic prosthetics industry (1974-2018). We show that startups, incumbents in conventional prosthetics, and established firms in other industries built on their prior knowledge to create and integrate subtechnologies into a radical system. When combined with their pre-histories, these investments for technology incubation resulted in different modes of value capture: incumbents dominated product commercialization; startups captured value through cooperative strategies, licensing, or being acquired by incumbents; and established firms in other industries were largely knowledge spillover conduits who chose not to trade or enter into bionic prosthetics.

Keywords: radical technological systems, nascent industries, incumbent-entrant dynamics, value creation, value capture

JEL Classification: O31, O33, L60, L10

Suggested Citation

Kim, Seojin and Agarwal, Rajshree and Goldfarb, Brent D., Creating Competencies for Radical Technologies: Revisiting Incumbent-Entrant Dynamics in the Bionic Prosthetic Industry (September 16, 2022). Available at SSRN: https://ssrn.com/abstract=4024471 or http://dx.doi.org/10.2139/ssrn.4024471

Seojin Kim (Contact Author)

University of Maryland, Robert H. Smith School of Business ( email )

College Park, MD
United States

Rajshree Agarwal

University of Maryland - Robert H. Smith School of Business ( email )

College Park, MD 20742-1815
United States

Brent D. Goldfarb

University of Maryland - Robert H. Smith School of Business ( email )

College Park, MD 20742-1815
United States
301-405-9672 (Phone)
301-314-8787 (Fax)

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