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Minah Park: Session 3

Technology strategy: an evolutionary process perspective


Robert A. Burgelman and Richard S. Rosenbloom
Technology is firms functional capability which gives a competitive advantage in the
market. Therefore, it calls for the development of a technology strategy. The author uses
evolutionary process perspective as a framework for discussing technology strategy. As
biological evolution perspective is integrated, it provides variation, selection and retention
mechanisms to explain the behavior of social system. It also recognizes the importance of
individual and social learning process and emphasizes social context of innovation.
Embedded in the cultural evolutionary perspective, capabilities-based perspective perceives
strategy making as a social learning process consists of three components: capabilities,
strategy and experience. Capabilities are resource of organization that need to be discovered,
selected and retained. Based on the capabilities, strategy is developed and carried out. The
experience gained from the execution provides feedback on capabilities and it is accumulated
as a form of skills. Then the paper discusses the internal forces and external forces for
technology strategy. In the case of internal forces, generative mechanisms and integrative
mechanisms are employed to explain strategic behavior and organizational context
respectively. Strategic behavior is associated with routines of organization, also known as
gene in the term of biological evolutionary perspective. Due to the existence of inertia
behavior, the development for new product and process tends to be enhancement of existing
capacities. Organizational context explains that behavior is supported by the dominant culture
of organization. This selection mechanism affects firms ability to explore and exploit.
Secondly, the external forces such as technology evolution and industry are also explained by
generative mechanisms and integrative mechanisms respectively. Technological capability of
organization is significantly affected by the technological evolution that occurs in the field
that the organization is part of. Industry context emphasized the occupying advantageous
market place. Last section of the paper suggests four dimension of technology: competitive
positioning, value chain, scope of technology strategy, and depth of technology strategy.
To sum up, the author used an evolutionary process perspective as a framework to
understand the concept of technology strategy, which is a very popular subject until
nowadays. However, the paper lacks multi-level study to fully convert reader into the
perspective. The thorough analysis of using the framework and the argument of opposition
needs to be fully examined to generalize the perspective. The author mentioned few examples
of firms that support the framework, but these examples are brief overview of the full story.
More detailed case study would further help readers to understand the framework. Also while
the paper focuses on the perspective of general managers, it will be further strengthened if the
responsibility of functional manager is elaborated. In Fig18.1 it was stated that the experience
provide feedback to capabilities. However it brought question of is feedback only provided to
the capabilities not to strategy, if so is strategy also accumulative? Instead of affecting the
capabilities, sometimes there seems to be a case of changing strategy to save time or lack of
resource.
Technical Progress and Co-invention in computing and in the uses of computers
Timothy Bresnahan & Shane Greenstein
This paper explores the process of transiting from host-based computing to
client/server computing in late 80s and early 90s. Host based computing were employed
most of major establishments in 80s. It enabled managers to control many aspect of business
with database manager system. There were problems of management and complexity of the
program but stable industry structure by cluster of firms such as IBM maintained the status by
the end of 1980s. Client/server computing programs started to spread at the end of 1980s due
to its superior technology and lower cost. The authors suggest several mechanisms of
switching process: classic diffusion theory, vendor lock-in theory, market thickness theory,
MIS agency theory, idiosyncratic application theory and co-invention theory. The theories
were tested with seven empirical models. Buyer-seller connection proved idiosyncratic theory
and market thickness theory was supported rather than MIS agency theory and lock-in theory
respectively. Evidence from Software use indicated that the establishment with higher used of
scientific application has higher speed of switching to C/S computing. The pattern of higher
degree of embeddedness of computing in establishment makes it harder and slower switching
supported co-invention theory rather than the classic diffusion theory. Overall decrease in the
total percentage of DSO indicated the switching process is getting easier with time.
The paper thoroughly tested its theories by setting complex experiment method. The
complexity and delicateness of setting variables were very impressive. However, there were
few aspects that the author overlooked. First of all, the author ignores the price variable and
demand function in the market. The purpose of software, relationship with vendors are
important factor of deciding the transition however, the price effect is hardly mentioned. Also
in the paper, it was written that establishments tend to focus on the higher adjustment cost and
switching cost than high benefit that can come from the transition, but there is no actual
numerical data to support the argument. The interpretation sounded probable but empirical
data is in needed. In last, the paper is based on specific events in relatively short period of
time. To generalize the co-invention theory, more case studies in a variety fields would be
further help the understanding of co-invention.

Explicating dynamic capabilities: the nature and microfoundations of (sustainable)


enterprise performance
David J. Teece
The focus of the paper is maintaining competitive advantage in fast moving and
globalized market where economy became more diverse and opened requires dynamic
capabilities, continuous creation, extension and upgrade of capabilities. Dynamic capabilities
frame work is based on the resource based theory but while the resources are considered as
static in sustaining technical fitness in the perspective of rb theory, dynamic capabilities
emphasizes sensing and seizing the opportunities provided from unstable environment and
amplifying evolutionary fitness. Foundation of dynamic capabilities lies within sensing,
sensing and managing threats/transformation. Sensing opportunity is an organizational
process depends on the process of information with specific knowledge and practical wisdom.
Identifying trajectories, capturing users need and monitoring external development can
examples. Seizing opportunity is related with unbiased decision making of leaders deciding
when, where and how much to invest. Selecting and creating business model for strategy in
the context of organizational innovation also needs to be taken under consideration. Routine
and standard procedures built upon previous success of the firm prevent decision making for
radical innovation. Microfoundation of seizing opportunity is further specified into selecting
business model, enterprise boundaries, managing complements and platforms, and avoiding
bias. Lastly, managing threats and reconfiguration brings attentions to decentralization,
cospecializaion and knowledge management. Decentralization of organization offers
responsibility and flexibility to managers by giving them control of decision making process
followed by higher performance. Cospecialization is process of enhancement of value by
collaboration. It is especially signified in the industries where innovation is cumulative and
requires platform.
The paper provided general theory of strategic management that recognize the
unstable and fast moving economy and acknowledge the dynamic capabilities. By elaborating
on sensing, seizing, and managing process, the process of organization to maintain
competitive advantage was well addressed. However, personally the explanation dealing with
crisis such as sudden threat or complete technology shift was wanted. The author fully
understands the flux and instability of global market and captures the process of firms
response to it. But the explanation of firms strategy in the case of rapid change and urgent
shift where their resource and technology looses usefulness was lacking.