The Road Not Taken: Technological Uncertainty and the Evaluation of Innovations

David Tan ()
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David Tan: Foster School of Business, University of Washington, Seattle, Washington 98195

Organization Science, 2023, vol. 34, issue 1, 156-175

Abstract: When venturing into unfamiliar areas of technology, inventors face ex ante technological uncertainty, that is many possible alternative technological paths going forward and limited guidance from existing technological knowledge for predicting the likelihood that a given path will successfully result in an invention. I theorize, however, that this ex ante technological uncertainty becomes less apparent when evaluating inventions in hindsight. When one knows that a given technological path turned out to be successful ex post, it may be difficult to appreciate the ex ante plausibility of reasons to prefer alternative paths. As a result, inventions may seem more obvious to those evaluating inventions with the benefit of hindsight. My theory yields a counterintuitive implication; when inventors venture into less familiar areas of technology, there is a greater risk of evaluators overestimating obviousness due to hindsight bias. Empirical evidence comes from novel data on accepted and rejected patent applications, including hand-collected data from the text of applicant objections to obviousness rejections and examiners’ subsequent reversals of rejections in response to applicant objections.

Keywords: innovation; technological change (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ororsc:v:34:y:2023:i:1:p:156-175

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