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CHAPTER 5:
PATHS: EXPLOITING TECHNOLOGICAL
TRAJECTORIES
1
INTRODUCTION
 Firms’
innovation strategies are strongly
constrained by their current position and by the
specific opportunities open to them in future, i.e.
they are path-dependent.
 Two Constraints:
 Present and likely future state of
technological knowledge
 Limits of Corporate Competence
INTRODUCTION
 Learning is incremental; trying to learn in too
many directions can be costly
 Hence, innovation is, by and large, focused and
constrained.
 From the concept of path-dependency has
emerged the notion of
Technological
Trajectories.
TECHNOLOGICAL TRAJECTORIES
 There are marked differences amongst industrial sectors in the
sources and direction of technological change, such as:
 Size of the Firm:
 Typically BIG in Chemicals, Road vehicles, Material Processing,
Aircraft and Electronics Products, and small in machinery, instruments
and software.
 Type of product made:
 Typically PRICE SENSITIVE in bulk materials and consumer products,
and PERFORMANCE SENSITIVE in drugs and machinery.
 Objectives of Innovation:
 Typically PRODUCT INNOVATION in drugs and machinery;
PROCESS INNOVATION in Steel; Both in Automobiles.
TECHNOLOGICAL TRAJECTORIES
 Sources of innovation:
 SUPPLIERS OF EQUIPMENT and other production inputs in
agriculture and textiles; CUSTOMERS in machinery, equipment
and software; IN-HOUSE R&D in chemicals, electronics and
transport; BASIC RESEARCH in drugs.
 Locus of own innovation:
 R&D LABS in chemicals and electronics; PRODUCTION
ENGINEERING DEPARTMENTS in Automobiles and bulk
materials; DESIGN OFFICES in machine-building and SYSTEMS
DEPARTMENTS in banks and supermarket chains.
5 MAJOR TECHNOLOGICAL TRAJECTORIES
 1. SUPPLIER DOMINATED FIRMS
 Technical change comes from suppliers of
machinery and other production inputs e.g.
Agriculture and Textiles
 Main task of this innovation strategy is TO
USE TECHNOLOGY FROM ELSEWHERE
TO
REINFORCE
COMPETITIVE
ADVANTAGE
5 MAJOR TECHNOLOGICAL TRAJECTORIES
 2. SCALE INTENSIVE FIRMS
 Technological accumulation is generated by the
design, building and operation of complex
production systems and products e.g. large civil
engg. Projects, extraction and processing of bulk
material
 Main tasks of this innovation strategy are THE
INCREMENTAL
IMPROVEMENTS
IN
TECHNOLOGY,
EARLIER
EXPERIENCE,
DEVELOPMENT OF BEST PRACTICES
5 MAJOR TECHNOLOGICAL TRAJECTORIES
 3. SCIENCE-BASED FIRMS
 Technological accumulation is generated by corporate R&D
labs
 Heavily dependent on knowledge, skill techniques emerging
from academic research
 Main tasks of this innovation strategy are TO MONITOR AND
EXPLOIT ADVANCES MADE IN BASIC RESEARCH, TO
DEVELOP TECHNOLOGICALLY RELATED PRODUCTS,
RECONFIGURE
IN
LIGHT
OF
CHANGING
TECHNOLOGY
AND
TO
ACQUIRE
THE
COMPLEMENTARY ASSETS
5 MAJOR TECHNOLOGICAL TRAJECTORIES
 4. INFORMATION-INTENSIVE FIRMS
 Have begun to emerge only in the last 10-15 years
 Services sector mostly; finance, publishing, telecom and
travel
 Main sources of technology are in-house software and
systems departments, suppliers of IT hardware & software
applications
 Main purpose is developing systems for information
processing
 Main tasks of this innovation strategy are THE
DEVELOPMENT AND OPERATION OF COMPLEX
INFORMATION
PROCESSING
SYSTEMS
AND
RADICALLY NEW SERVICES
5 MAJOR TECHNOLOGICAL TRAJECTORIES
 5. SPECIALIZED SUPPLIER FIRMS
 Generally small and provide high performance inputs into
complex production systems, information processing and
product development in the form of machinery, components,
instruments and software
 They accumulate skills to match advances in technologies with
user requirements
 Main tasks of this innovation strategy are TO KEEP UP WITH
NUSER NEEDS, LEARNING FROM ADVANCED USERS
AND MATCHING NEW TECHNOLOGIES TO USER
NEEDS.
REVOLUTIONARY TECHNOLOGIES
 BIOTECHNOLOGY
 ADVANCED MATERIALS
 INFOTECH
DEVELOPING FIRM SPECIFIC COMPETENCIES
 The sustainable competitive advantage of firms resides not in
their products but their CORE COMPETENCIES.
 Examples of core competencies;
 SONY in miniaturization
 PHILIPS in optical media
 3M in coatings
 CANON in precision mechanics, fine optics and microelectronics
 PEPSI & NIKE in marketing
 Examples of core products:
 HONDA in light transport vehicles
 INTEL in high-performance microprocessors