Implications of market heterogeneity for technology strategy

While the primary concern of the strategy and technology management fields has been with the supply side activities of firms and technologies, there is growing recognition that external demand environment can exercise significant influence over these activities. This dissertation contributes to our understanding of the role of demand in innovation by explicitly focusing on the diversity of consumer needs and preferences present in the market place, and considering the implications of such heterogeneity for technology development and firm strategy. Each essay of the dissertation examines the effects of market heterogeneity on a distinct aspect of technology strategy--technology evolution, technology competition, and development strategy. The dissertation presents a model of that explicitly considers the influence of heterogeneity in market demand on firms' innovation choices. The model is analyzed using computer simulation. The model is used to examine the dynamics of product and process innovation (Utterback and Abernathy, 1975) as well as the dynamics of technology substitution and displacement. The analysis reveals market heterogeneity to be a sufficient driver of these phenomenon, independently of the supply-side factors to which these outcomes are often attributed. Drawing on the conceptual drivers of the model, the dissertation also presents a discussion of the implications of market heterogeneity for the management of innovation within the firm.