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Complementary assets as pipes and prisms: Innovation incentives and trajectory choices
Author(s) -
Wu Brian,
Wan Zhixi,
Levinthal Daniel A.
Publication year - 2014
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/smj.2159
Subject(s) - incentive , investment (military) , dual (grammatical number) , industrial organization , complementary assets , set (abstract data type) , technological change , business , economics , microeconomics , trajectory , face (sociological concept) , computer science , macroeconomics , politics , physics , astronomy , art , social science , programming language , literature , sociology , political science , law
The issue of the failure of incumbent firms in the face of radical technical change has been a central question in the technology strategy domain for some time. We add to 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 (pipes) 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 . Copyright © 2013 John Wiley & Sons, Ltd.