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Technological discontinuities pose serious challenges to top managers’ attention. These discontinuities, which often occur at the fringes of an industry, are usually driven by innovative and (often) venture capital-backed start-ups creating new products and transforming existing industries in ways that are difficult for incumbent managers to understand against the backdrop of their existing cognitive schemata. However, failing to appreciate and embrace successful technological discontinuities might endanger incumbents’ very existence. Extending the attention-based view, we explore whether and how interorganizational relationships guide top managers’ attention either to or away from technological discontinuities. We propose that homophilous relationships (e.g., alliances with industry peers) should exhibit a negative relationship with incumbents’ timely attention to technological discontinuities, whereas heterophilous relationships (e.g., with venture capitalists as a result of coinvestments) should exhibit a positive relationship. Furthermore, we hypothesize that the status of the partners strengthens the effect of homophilous and heterophilous relationships with the timely attention of top managers to technological discontinuities. Based on a longitudinal study of the incumbents in four information and communications technology industry sectors, we find that heterophilous ties through corporate venture capital (CVC), coinvesting with high-status venture capital firms, exhibit a strong positive relationship with timely attention. CVC, when it connects senior management to high-status venture capitalists through coinvestments, has a special role in directing top managers’ attention to technological discontinuities and ensuing business opportunities. Implications for the understanding of the role of interorganizational ties as structural determinants of top managers’ attention are discussed.

Research summary: We study how technological discontinuities generate first- and second-order effects on alliance formation and termination, leading to reconfiguration of firms' alliance portfolios. Following technological shocks, we argue that firms often seek alliances that provide new resources while also having incentives to form alliances for reinforced and challenged resources that complement the new resources. In parallel, alliance terminations, even involving resources otherwise unaffected by the discontinuity, increase due to limits in firms' alliance carrying capacity. We study biopharmaceutical firms between 1990 and 2000, which faced a technological discontinuity in 1995 in the form of combinatorial chemistry and high-throughput screening. We improve understanding of how technological discontinuities affect the value of resources and how firms reconfigure alliance portfolios in response. Managerial summary: When firms form alliances to gain new resources during technological discontinuities that disrupt their industry, they cannot consider only the focal new partnerships. Instead, new alliances create complementarity and substitution pressures that lead to broader reconfiguration of the firms' alliance portfolios: (1) complementarity creates incentives to also form alliances for resources that the technological discontinuity reinforces or challenges in order to improve the collective value of co-specialized assets; (2) substitution creates incentives to terminate existing alliances, even if their value is otherwise unaffected by the discontinuity, in order to create carrying capacity for new alliances. Thus, one new alliance can generate a cascade of reconfiguration that challenges the balance between the benefits of stability and the need for change in an alliance portfolio.

We examine the responses of major pharmaceutical firms to the advent of biotechnology over the period 1980 to 2008 to explain why established firms vary in their adoption of technological discontinuities. Combining insights from upper echelons theory, personality theory, and research on organizational responses to new technologies, we posit that narcissistic chief executive officers (CEOs) of established firms will be relatively aggressive in their adoption of technological discontinuities. We propose, however, that the effect of a CEO's narcissism on organizational outcomes will be moderated by audience engagement—the degree to which observers view a phenomenon as noteworthy and provocative—which varies over time. When audience engagement is high, narcissistic CEOs will anticipate widespread admiration for their bold actions and thus will invest especially aggressively in a discontinuous technology. Drawing from work on managerial cognition, we further hypothesize that CEOs' narcissism will influence their top managers' attention to a discontinuous technology, an association that will also be moderated by audience engagement. Finally, we suggest that managerial attention to the discontinuous technology will subsequently be reflected in company investments in the new technological domain. Results provide considerable support for our hypotheses and highlight the role of narcissism in the context of radical organizational change, the influence of audience engagement on executive behavior, and the effect of executive personality on managerial attention.

Using a dynamic capabilities lens, this study examines how technological and complementary capabilities affect firms' abilities to enter emerging technologies. The empirical evidence from a sample of pharmaceutical firms entering the new biotech fields indicates that both technological and complementary capabilities potentially affect firms' entry into emerging technologies and entry mode. However, the results also show that capabilities in the traditional technology and the emerging technology have different effects. Firms with capabilities in the emerging technology are more likely to enter new technological fields and more likely to use internal development in doing so. Complementary capabilities also increase the rate of entry into emerging technological fields. However, capabilities in traditional technology are found to be unrelated to the propensity to enter new fields, and to the choice of entry mode. These results are consistent with insights from the literature on dynamic capabilities and evolutionary theory. We examine the implications of these results for literatures on strategic alliances and technological competition.

I examine interfirm cooperation between incumbents and new entrants as a mechanism for incumbents to adapt to radical technological change through exploitation of complementary assets. The research setting is the biopharmaceutical industry, where I analyze 889 strategic alliances between 32 large pharmaceutical firms and providers of the new biotechnology. I find that incumbents that focus their network strategy on exploiting complementary assets outperform incumbents that focus on exploring the new technology. However, there are limits to this strategy due to diminishing marginal returns to alliance intensity. I am also able to show that an incumbent's new product development is positively associated with its performance.

We suggest that the type of complementary assets (generic versus specialized) needed to commercialize a new technology is critical in determining the industry- and firm-level performance implications of a competence-destroying technological discontinuity. At the industry level, we hypothesize that incumbent industry performance declines if the new technology can be commercialized through generic complementary assets, whereas incumbent industry performance improves if the new technology can be commercialized through specialized complementary assets. At the firm level, we posit that an incumbent firm's financial strength has a stronger positive impact on firm performance in the postdiscontinuity time period if the new technology can be commercialized through generic complementary assets. We hypothesize, however, that an incumbent firm's R&D capability has a stronger positive impact on firm performance in the postdiscontinuity time period if the new technology can be commercialized through specialized complementary assets. Drawing on multi-industry, time series, and panel data over a 26-year period to analyze pre- and postdiscontinuity industry and firm performance, we find broad support for our theoretical model.

Research in creative destruction has argued that competence-destroying discontinuities result in incumbents' underperformance in research and development (R&D) with respect to entrants, even if complementary assets aid incumbents in retaining market share. In this paper, I propose that attention to the extent of competence destruction is necessary but not sufficient. An analysis of differences in R&D performance through a discontinuity requires assessment not only of old competence destruction but also of new competence access; that is, it requires assessment of both old capability obsolescence and new capability acquisition. I find evidence for this proposition in data from the biotechnology disruption to the anticancer drug market. In particular, my research design is a within-market matched pair of discontinuities: from chemotherapy to small-molecule targeted drugs, and from chemotherapy to large-molecule targeted drugs. Although equally competence destroying, the two discontinuities differ in the access incumbents have to the new capabilities required: whereas all new capabilities are available in the former, one new capability is inaccessible to incumbents (and to many entrants) in the latter. The contrasting results of these two discontinuities support my proposition: in the competence-destroying discontinuity with full access to new capabilities, incumbents did not fall behind entrants; in the other discontinuity, incumbents fell behind only those entrants that owned the difficult-to-access new capability. I close with implications for research in creative destruction, in rational adaptation to environmental change, and in strategic renewal.

Purpose This research aims to address how a firm can mobilise resources through interfirm relationships to bridge technological discontinuities. Design/methodology/approach This research adopts a processual single case study to undertake an empirical investigation from the perspective of a technology-bundled net as the research boundary. Findings This research produces three key findings. First, mobilising resources across firm boundaries to create an adequate bundling of product, process and marketing technologies is the cornerstone of bridging technological discontinuities. Second, resource mobilisation between firms in the transition to a new technological trajectory is affected by the sediments accrued in the existing (old) trajectory. Third, technological discontinuities may be competence-enhancing, and their radical effects may originate from non-technical causes. Originality/value This paper contributes to the research of radical innovation from an interaction and networks perspective and also by focusing on resource mobilisation taking place in the transition from an existing technological trajectory to a new one. In particular, this paper takes into account the relatedness of resources and the influences of past interaction underpinning an old trajectory in the bridging of technological discontinuities.

Intro -- Contents -- Preface -- Chapter 1: Tesla through 2015:Something Old andSomething New -- Chapter 2: 2012-2015: IndustryForm Follows TechnologyFunction -- Chapter 3: 2016: \"Real Cars\" andReal Competition -- Chapter 4: 2017: \"Enter\" theIncumbents -- Chapter 5: 2018: One \"Hell\"of a Purgatory -- Chapter 6: Epilogue: Into 2019 -- Summary and Conclusion: Volumes I-III -- Media Articles -- References -- About the Author -- Index -- Adpage.

Purpose - The purpose of this paper is to examine how and why outsiders, rather than incumbents, are able to take advantage of technological discontinuities.Design methodology approach - The paper employs a case study of a single innovation that transformed the technology of Formula 1 motor racing.Findings - The findings show how social capital made up of \"weak ties\" in the form of informal personal networks, enabled an outsider to successfully make the leap to a new technological regime.Practical implications - The findings show that where new product development involves a shift to new technologies, social capital can have an important part to play.Originality value - It is widely accepted that radical innovations are often competence destroying, making it difficult for incumbents to make the transition to a new technology. The paper's findings show how the social capital of outsiders can place them at a particular advantage in utilizing new technologies.