Technological Discontinuities and Industrial Dynamics
A technological discontinuity is a substantial change in the set of technological competences required to design and produce a product, often resulting in a significant change in the price/performance ratio of a product. Established firms often face severe difficulties in adjusting to a discontinuity. The thesis mainly treats:
the process of a technological discontinuity;
what determines the effect of technological discontinuities on industry structure and market share changes between firms;
how technological discontinuities can be conceptualized, measured and monitored.
The main empirical area is the global machine tool industry, with shifts from conventional to numerically controlled machine tools, and from stand alone machine tools to flexible manufacturing systems.
A critical review of the literature suggests that there is great confusion regarding the concept of a technological discontinuity, and that continued work on how to measure and classify technological change is needed. A stylized view of the process of a technological discontinuity, built up from a set of distinct phases and sub-processes, is outlined.
Based on case studies and literature work it is argued that four units of analysis are needed when analyzing what determines the effect of technological discontinuities on industry structure and on changes in market shares between firms. The units, which are integrated into a model, are (1) the industry, and in particular the speed of diffusion of the new substitute on the market; (2) the firm, and its ability to change its perception about the future, its technology base and organizational routines; (3) the (local) technological system; and (4) the character of the technological change to users and suppliers.
It is also suggested that a number of indicators of technological and industrial change (patents, bibliometrics, entrants data, price/performance changes) could act as warning signals for the particular technical change which opens up a mass market for the new substitute. This is a critical point in time since fast market growth and associated volume related advantages might exclude latecomers. Technology indicators can be particularly useful if they are used to monitor the development of specific sub-systems that constitute the bottle-necks for increasing sufficiently the performance of a substitute so that mass market segments can be opened up. Technological indicators can therefore be useful to monitor the process of a technological discontinuity.