J.P. Eggers, Assistant Professor of Management and Organizations, Stern School of Business, New York University
Strategic Management Journal, February 2014, Volume 35, Issue 2, pp. 159–178
Abstract: This article investigates the post-entry implications of pre-entry technological choices made during the uncertain period before a dominant design. Building on work on technological dynamics and organizational inertia, I argue that too early commitments to the winning technology may impede the ability to bring the best product to market, but delaying investment too long limits the ability to accumulate useful knowledge. Using data from the evolution of the flat panel display industry from 1965 to 2005, the study shows empirical support for the two theoretical mechanisms and offers the surprising result that firms starting in the losing technology before switching outperform other firms in terms of product value. Switching, while difficult behaviorally in recovering from failure, both delays difficult-to-reverse technological commitments and develops market knowledge.