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The Handbook of Technology and Innovation Management by Scott Shane

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1.3. Theoretical Perspectives

The earlier section highlights the impressive regularities in the evolutionary trajectories that have been observed in diverse product innovations and industries; however, it has been removed from the underlying theoretical perspectives with which the evolution of the industries have been examined. In this section, we compare and contrast the theoretical perspectives of the three main bodies of literature reviewed above: technology management, organizational ecology, and evolutionary economics, focusing on the complementary or contradictory explanations of key questions that the three streams offer (see Table 1.9).

Why is there a flurry of entry early on? Although all three of these research streams document high levels of entry early in an industry, the underlying drivers that are posited differ substantially. Early theoretical work in this area (Mueller and Tilton, 1969) proposed that high technical uncertainty early in an industry's history make R&D efforts experimental and on a small scale. Small firms are thus able to enter and compete technologically, since large firms do not hold a scale advantage. The expectation of positive profits from successful innovation spurs entry. The technology management literature makes similar arguments, focusing on the need for small-scale experimentation to uncover user preferences (e.g., Utterback and Abernathy, 1975; Abernathy and Utterback, 1978).

Table 1.9. Theoretical underpinnings of key stylized facts ...

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