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Competing technologies and industry evolution: The benefits of making mistakes in the flat panel display industry

Authors

  • J. P. Eggers

    Corresponding author
    1. Department of Management and Organizations, Stern School of Business, New York University, New York, New York, U.S.A.
    • Correspondence to: J. P. Eggers, Department of Management and Organizations, Stern School of Business, New York University, 40 West Fourth St., Tisch 715, New York, NY 10012, U.S.A. E-mail: jeggers@stern.nyu.edu

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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. Copyright © 2013 John Wiley & Sons, Ltd.

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