The Dynamics of Learning and Competition in Schumpeterian Environments

Gianluigi Giustiziero (), Aseem Kaul () and Brian Wu ()
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Gianluigi Giustiziero: Management Department, Frankfurt School of Finance & Management, 60322 Frankfurt, Germany
Aseem Kaul: Carlson School of Management, University of Minnesota, Minneapolis, Minnesota 55455
Brian Wu: Ross School of Business, University of Michigan, Ann Arbor, Michigan 48109

Organization Science, 2019, vol. 30, issue 4, 668-693

Abstract: In this study, we examine the nature of Schumpeterian competition between entrants and incumbents. We argue that incumbents may respond to the threat of entry by either attacking the entrant or trying to learn from it, and that entrants, in turn, may react by either reciprocating the incumbent’s advances or retreating from it. Putting these competitive choices together, we develop a framework of four distinct potential scenarios of Schumpeterian competition. In particular, we emphasize a scenario we term creative divergence , wherein incumbents try to learn from entrants and build on their technologies, but their investments to do so cause entrants to retreat, resulting in diminishing returns to learning investments by incumbents. Exploratory analyses of the U.S. cardiovascular medical device industry find patterns consistent with the creative divergence scenario, with incumbent knowledge investments helping them to learn from entrants, but these learning benefits being undermined as entrants move away from incumbents.

Keywords: competitive dynamics; evolutionary theory; absorptive capacity; Schumpeterian environments; creative divergence; knowledge spillovers (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (8)

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