Perpetuating sales: enabling incumbent survival of radical technological shifts

Technological change can either sustain the competencies of existing firms or destroy them (Bower and Christensen, 1995). When a new dominant technology is sustaining, it incentivises existing firms to invest and it sustains the current trajectory of the industry (Arrow, 1962). When a technology is radical, it requires firms to acquire new competencies, causes current competencies to lose their value and incentivises entrants to invest (Gilbert and Newbery, 1982; Teece 1986; Tripsas, 1997). Existing firms, who are often entrenched in the use and routines of their old technological trajectory, find it difficult to transition to the new technology and entrants who can more easily adapt to the new radical technology replace them in the industry (Tushman and Anderson, 1986; Christensen, 1997; Tripsas, 1997).A body of literature has emerged, discussing how existing firms can prepare for such change and react to it once it occurs (Christensen, 1997; Jiang et al., 2010; Hess and Rothaermel, 2011; Tripsas, 1997; Tushman and Anderson, 1986). This literature has created exceptions where existing firms can survive these radical technological shifts. There are broadly three categories described in the incumbent survival literature- (i) specialized complimentary assets to the new technology that allow incumbents a competitive advantage on entrants. (ii) Strategic alliances with firms in different industries or different places in the supply stream that allows firms access to a wide array of competencies and (iii) R&D innovation which gives firms a wider frame of reference for new technologies.