STRATEGIC KNOWLEDGE DISCLOSURE: ITS EFFECT ON COMPETITIVE RESPONSE AND KNOWLEDGE-BASED COMPETENCIES IN THE GLOBAL HARD DISK DRIVE INDUSTRY

How does a leading firm sustain its competence-based advantage in a competitive landscape against threats of imitation and substitution? In high-velocity competitive markets, an inherent tension arises when firms wish to prolong the value of their technological competencies, while rivals seek to make those competencies obsolete. These markets are characterized by continuous technological change, fickle customers, and frequent shifts in the competitive landscape. Firms must continually update their innovative competencies that are recurrently targets of imitation and substitution, and managers face challenges in discerning the appropriate competencies their firms should commit to and which they should avoid, resulting in the difficulty of setting straightforward strategic goals for the firm. Looking in the hard disk drive industry from 1987 to 1999, I empirically show that leading firms knowledge disclosure of core technologies has a positive effect on the probability of laggards imitating the leader. Moreover, I show that after leading firms disclose, they introduce next-generation products sooner and prevent laggards from quickly introducing their next-generation products. Thus, I suggest that a leading firms knowledge disclosing activities can shape the competitive landscape by influencing rivals scope of search for innovation opportunities. Namely, leading firms can prolong their established competencies by disclosing knowledge on their innovations by promoting imitation and delaying or preventing substitution.