Technological Discontinuities and Complementary Assets : A Longitudinal Study of Industry and Firm Performance

The point of departure is a competence-destroying technological discontinuity. We posit that the type of complementary assets (generic vs. specialized) needed to commercialize the new technology is critical in determining the industry- and firm-level performance in the post-discontinuity time period. If generic complementary assets are needed to commercialize the new technology, we posit that industry-level performance will decline. In contrast, if specialized complementary assets are needed to commercialize the new technology, we hypothesize the industry-level performance will improve. Moreover, we predict interfirm performance differentials based on a firm's financial strength and its R&D capability. In particular, a firm's financial strength is posited to have a more positive impact on firm-level performance in the post-discontinuity period if the new technology can be commercialized through generic complementary assets. In contrast, a firm's R&D capability is hypothesized to have a more positive effect on firm-level performance if the new technology can be commercialized through specialized complementary assets. We draw on times series and panel data over a twenty-six year period in four industries to more fully understand post-discontinuity performance, while controlling for pre-discontinuity factors