Technological Evolution, System Architecture and the Obsolescence of Firm Capabilities

It is shown that the pattern of innovation in the mainframe computer industry is not well characterized by existing models and sheds light on the dynamics of the evolution of the capability base of firms in an environment characterized by complex products and rapid technological change.

Abstract

We present a historical study of technological evolution in the mainframe computer industry. We show that the pattern of innovation in the industry is not well characterized by existing models. The incremental evolution of mainframe system performance as seen by the customer was the result of an aggregation that masked substantial discontinuities at the component level. New technological concepts led to the frequent obsolescence of existing capabilities, despite the stability of customer needs and the persistence of a dominant design. The nature of our observations is captured in a simple critical path model of technological evolution. Our conceptualization sheds light on the dynamics of the evolution of the capability base of firms in an environment characterized by complex products and rapid technological change.