Corporate strategies for managing emerging technologies

Abstract

The emergence of radically new industrial technology is a powerful competitive force with significant strategic implications. Entirely new industries may develop around an emerging technology as existing industries are transformed or destroyed in its wake. Schumpeter1 aptly characterized such technological change as a force of “creative destruction,” which leaves both winners and losers among industrial firms. What factors distinguish these firms and their strategies for dealing with technological change? This paper reports on a study of the strategic options available to firms facing radical technological change, and the strategic choices made by firms involved in the emerging biotechnology field. Of particular interest are the widespread use of external relationships and their roles in the technology strategies of established firms. The paper begins with brief definitions of established and emerging firms, followed by a review of insights into the strategic nature of technological change drawn from prior studies. The evolving positions of established and emerging firms in the biotechnology field are then described with some elaboration of the collaborative relationships which characterize its early development. A conceptual framework is proposed to differentiate the strategic choices made by established firms in response to advances in biotechnology, and this framework is used to examine the roles played by selected interorganizational relationships in corporate strategies. The paper argues that these external alliances are appropriate initial responses to the strategic management challenges presented by radical technological change, but that the nature and significance of these alliances and associated corporate strategies change as the technology advances toward commercialization.