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Emergence of entrepreneurs following exogenous technological change
Author(s) -
Arend Richard J.
Publication year - 1999
Publication title -
strategic management journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 11.035
H-Index - 286
eISSN - 1097-0266
pISSN - 0143-2095
DOI - 10.1002/(sici)1097-0266(199901)20:1<31::aid-smj19>3.0.co;2-o
Subject(s) - inefficiency , robustness (evolution) , economics , technological change , bounded rationality , context (archaeology) , ex ante , industrial organization , microeconomics , rationality , creative destruction , technical change , neoclassical economics , macroeconomics , paleontology , biochemistry , chemistry , biology , political science , productivity , law , gene
This paper explains how, after an exogenous technological change occurs, entrepreneurs displace incumbents who were ex ante capable of exploiting any innovations that resulted from the change. The model initially considers classical economic assumptions in the context of process innovations, and then its robustness to uncertainty, bounded rationality, firm asymmetry, and product innovations are discussed. The model is preliminarily tested against industry trends, using both results from an analysis of the information technology sector and from the literature. The paper does not suffer from the inconsistency of explaining how capable incumbents are displaced by resorting to characterizations of incumbents as incapable due to some inefficiency; the paper models incumbents as efficient yet rationally choosing, in some instances, to be displaced. Copyright © 1999 John Wiley & Sons, Ltd.