Competing Technologies and Industry Evolution: The Benefits of Making Mistakes in the Flat Panel Display Industry

J.P. Eggers

No 10-10, DRUID Working Papers from DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies

Abstract: Managers at firms facing uncertain competing technologies evolving concurrently face a complex decision set, including options to invest in one technology or other, both technologies, or to wait to invest. This study investigates the role that experience, learning and timing play in affecting the firm-level pros and cons of each of these four strategies in a technological competition situation. Using a unique data set on the evolution of the global flat panel display industry, this study offers an example where firms that initially support the losing technology but later switch to the dominant technology actually exhibit the best performance. The study also suggests two simultaneous reasons for this advantage. First, there is a late mover advantage based on the timing of the technological commitments made by firms. Second, there is an early-mover advantage in broad technological learning that manifests as an increased ability to innovate, and this advantage is roughly one-third to one-half the size of the late mover advantage. Tracking the evolution of competition in flat panel displays, organizational decisions, and both product- and firm-level outcomes, this study provides insight into the competing factors that constrain and motivate managerial decision-making.

Date: 2010
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