Doctoral Dissertation Research: Dynamics of Technological Innovation: Incumbents' Adaptation and Capability Building on the Internet

Duke University, Durham NC

Investigators

Abstract

This research examines how established firms adapt to technological innovations, such as the Internet, as well as the performance implications of such innovations. The specific research questions are: How strongly do current innovative efforts, relative to past experience, influence a firm's speed of technology adoption, the comprehensiveness of its technological adoption, and the returns to innovation? How can later adopters, disadvantaged by past innovation experience, catch up by increasing their innovative efforts? Although there has been strong theoretical emphasis on dynamic capabilities as critical to the adaptability of organizations, most empirical research has viewed organizations as evolving along paths and within boundaries determined by past experience. This study adds the new dimension of emerging capabilities to that of past-accumulated experience as widely studied in the literature. Emerging capabilities capture how firms organize for innovation once the decision for adoption has been made. This research views innovation as a dynamic process evolving over time and assesses the degree to which firms can directly influence their innovation process versus the degree to which past experience (initial capabilities) determines the path and direction of innovation. The dynamic capabilities perspective is used to reveal how firm capabilities emerge, develop, and change over time, as well as how firms integrate and reconfigure internal and external competencies to respond to technological and environmental change. Interviews with e-business managers and reviews of archival data sources, such as press releases and trade journals, will shed light on firms' adoption processes. Additionally, the project includes a large-scale survey of senior executives in charge of Internet activities/e-business operations at more than 600 U.S. financial institutions. Although promising at the outset, many innovations never pay off but rather consume enormous resources. This study thus offers important new insights into the way in which firms create value through collaboration and/or integration of existing with newly-developed capabilities, and through internal versus external innovation-related capability development. Moreover, ways in which later adopters manage to catch up during the innovation implementation process will be examined. This research analyzes firms' various adaptation strategies and innovation outcomes in the context of the Internet. The study will assess the importance of Internet implementation decisions relative to prior experience and timing of adoption, proposing that how an innovation is implemented matters more than when it is adopted. The findings from this research will ultimately provide organizations with a better understanding of how to develop innovation-related capabilities that improve innovation performance, and how to avoid implementation strategies that reduce the likelihood of yielding benefits from innovation.