Technology Analysis & Strategic Management

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Sources of technological innovation: Radical and

incremental innovation problem-driven to support
competitive advantage of firms

Mario Coccia

To cite this article: Mario Coccia (2016): Sources of technological innovation: Radical and
incremental innovation problem-driven to support competitive advantage of firms, Technology
Analysis & Strategic Management, DOI: 10.1080/09537325.2016.1268682

To link to this article: http://dx.doi.org/10.1080/09537325.2016.1268682

Published online: 29 Dec 2016.

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TECHNOLOGY ANALYSIS & STRATEGIC MANAGEMENT, 2016
http://dx.doi.org/10.1080/09537325.2016.1268682

Sources of technological innovation: Radical and incremental

innovation problem-driven to support competitive advantage of
firms
Mario Coccia
Arizona State University & CNR – National Research Council of Italy, Tempe, AZ 85287, USA

ABSTRACT ARTICLE HISTORY

A fundamental problem in the field of management of technology is how Received 15 January 2016
firms develop radical and incremental innovations that sustain the Revised 6 September 2016
competitive advantage in markets. Current frameworks provide some Accepted 28 November 2016
explanations but the general sources of major and minor technological
KEYWORDS
breakthroughs are hardly known. The study here confronts this problem Radical innovation; problem
by developing a conceptual framework of problem-driven innovation. The solving; sources of
inductive study of the pharmaceutical industry (focusing on ground- innovation; innovation
breaking drugs for lung cancer treatment) seems to show that the co- management; technological
evolution of consequential problems and their solutions induce the paradigm; technological
emergence and development of radical innovations. In fact, firms have a trajectory
strong incentive to find innovative solutions to unsolved problems in order
to achieve the prospect of a (temporary) profit monopoly and competitive JEL CLASSIFICATION
O31; O39; I19
advantage in markets characterised by technological dynamisms. The
theoretical framework of this study can be generalised to explain one of
the sources of innovation that supports technological and industrial
change in a Schumpeterian world of innovation-based competition.

Overview of the problem

This article has two goals. The first is to develop a theoretical framework, which explains one of the
sources of radical and incremental innovations. The second is to stress the importance of problem-
solving activity in R&D labs of firms for developing innovations and supporting competitive
advantage.
These topics are basic in the field of the economics of innovation and management of technology
to explain the competitive advantage of firms in markets with technological dynamisms (Coccia
2009b, 2010c, 2014b; Tushman and Anderson 1986; Nicholson, Rees, and Brooks-Rooney 1990; Chris-
tensen 1997; Garud et al. 2015). In fact, a main question in these research fields is how firms generate
and sustain radical and incremental innovations for competitive advantage in markets (cf. Coccia
2016a; Teece, Pisano, and Shuen 1997; von Hippel 1988). The study here confronts this question
by developing the approach of problem-driven innovation, which endeavours to explain one of
the sources of innovation in markets. As a matter of fact, this framework clarifies the understanding
of how firms generate innovative products/processes to support their competitive advantage in
markets with rapid change. This study can also provide results in both building a better theoretical
framework of the sources of technological innovation and informing best-practices of R&D manage-
ment. In order to position this analysis in a manner that displays similarities and differences with exist-
ing approaches, the study here begins by reviewing some frameworks of technological analysis.

CONTACT Mario Coccia mario.coccia@cnr.it

© 2016 Informa UK Limited, trading as Taylor & Francis Group
2 M. COCCIA

In general, innovation is driven by several concomitant determinants, and scholars of economics,

management of technology and related disciplines have described three principal approaches of
technological change: induced innovations, evolutionary theory of technological change, and
path-dependent development of innovations (cf. Dixon 1997). The first approach of induced inno-
vations shows that the demand-pull is an important factor for supporting innovations. Hicks
argued that: ‘A change in the relative prices of factors of production is itself a spur to innovation
and to inventions of a particular kind – directed at economising the use of a factor which has
become relatively expensive’ (Hicks as quoted by Ruttan 1997, 1521).
The second approach is the evolutionary theory of technological change, which abandons the dis-
tinction between factor substitutions and shifts in the production function (Nelson and Winter 1982).
This theoretical framework is based on (1) local search for technical innovations, organisational routines
and learning processes, (2) imitation of the practices of firms, and (3) satisficing behaviour of firms.
Third approach is the path-dependence development of innovation that considers a specific
sequence of micro-level historical events for the evolution of innovations: i.e. current choices of tech-
niques may influence the future characteristics of technology and knowledge over the long run
(Arthur 1989). Ruttan (1997, 1524) argues that:
each of the three approaches to understanding the sources of technical change – induced technical change, evol-
utionary theory, and path dependence – is approaching a dead end. Attempts to construct bridges linking the
separate approaches are now necessary to advance our understanding of the sources of technical change.

Several studies in management, to explain how firms achieve and sustain innovation, focus on the
concept of ambidexterity: firms simultaneously engage in exploratory and exploitative activities that
support both incremental and radical innovations (cf. Coccia 2009b, 2012e; Durisin and Todorova
2012; Lin and McDonough III 2014; O’Reilly III and Tushman 2004, 76, 2008; Danneels 2006). Other
approaches argue that a stage-gate model can rationalise and structure the technological development
of new products (Conforto and Amaral 2016; Cooper 1990). Wuest et al. (2014, 33) claim that:
The basic idea of the stage gate model is to divide a process in different phases and create a quality gate at critical
points in order to secure that the targeted goals are reached before proceeding to the next process phase. The
quality gates represent decision points, which determine on the basis of the current status of the process if the
project is continued, adapted/revised or terminated. The development process cannot pass a gate when it does
not meet all set criteria. (cf. Cooper 2008)

Ambartsoumian et al. (2011) argue that the phases of a new product development process are diffi-
cult to plan, especially when goals are not clearly defined (cf. Calabrese, Coccia, and Rolfo 2005;
Cavallo et al. 2014a, 2014b; Cavallo, Ferrari, and Coccia 2015). Current theoretical frameworks
analyse different characteristics of patterns of technological innovation,2 however, current
approaches in economics and management of technology have trouble explaining some determi-
nants that foster incremental and radical innovations in markets. In fact, the general driving force
of innovations at micro- and macro-level is hardly known (Dixon 1997).
In this context, the study here addresses the following questions: What is a general driver of inno-
vations in markets? How firms achieve and sustain innovation? The study here confronts these circum-
scribed questions by developing a conceptual framework of problem-driven based on the
coevolution of consequential problems and problem-solving activity of firms. In particular, this
study endeavours to explain one of the contributing factors that supports the innovation of firms
in markets. Accordingly, this study does not display a new model of product development but an inte-
grative approach within current theoretical frameworks that can clarify one of the sources of inno-
vations with R&D management implications.

Conceptual framework and working hypothesis

Usher (1954), using the theoretical framework of the Gestalt psychology, shows four main concepts
for explaining the evolution of technology:
 TECHNOLOGY ANALYSIS & STRATEGIC MANAGEMENT 3

(1) Perception of the problem: an incomplete pattern in need of resolution is recognised.

(2) Setting stage: assimilation of data related to the problem.
(3) Act of insight: a mental act finds a solution to the problem.
(4) Critical revision: overall exploration and revision of the problem and improvements by means of
new acts of insight.

This theoretical framework focuses on acts of insight that solve technological problems. The impli-
cations of Usher’s theory are the evolution of new technology with a vital cumulative change. As a
matter of fact, specific technological innovations are the outcome of a specific problem-solving
activity in the development of a specific technology in a defined research/technological field
(Coccia 2014c, 2014d, 2016a, 2016b). This conceptual background is important to underpin the theor-
etical framework here.
We suppose the existence of a relevant problem/need (unsolved) in society. Moreover, we con-
sider firms as purposeful systems that have purposeful elements with a common purpose, such as
maximising the profit, supporting the market leadership, etc. (cf. Ackoff 1971).
The working hypothesis (HPθ) of the study here is:
HPθ : Relevant and consequential problems/needs of consumers induce problem solving activities of firms (by
learning processes and acts of insight) that generate incremental and radical innovations in markets, ceteris
paribus.

This HPθ, called problem-driven innovation, is the base of the causal model in Figure 1.
In short, this study hypothesises that relevant problems support new technological paradigms
(and radical innovations)3 and consequential problems induce the development of these innovations
over time, ceteris paribus. At a certain point of the evolution of technology (β point in the temporal
axis of Figure 1), the technological paradigm is in the maturity phase and the accumulation, advance-
ment of technical knowledge and learning processes generate a paradigm shift for solving new pro-
blems/needs efficiently (Figure 1).
Through an inductive study of case study research (Eisenhardt 1989; Eisenhardt and Graebner
2007), focused on new target therapies for lung cancer, this research endeavours to substantiate
HPθ and clarify one of the sources of technological innovation.
The research field under study here is oncology because new biopharmaceuticals and small-mol-
ecules based on cancer genetics are generating a revolution in cancer treatments significant shifts in
markets (cf. Coccia and Bozeman 2016; Coccia 2012d; Coccia and Wang 2016; Boehringer-Ingelheim
2015). In particular, this study focuses on lung cancer since it has the highest worldwide mortality

Figure 1. Problem-driven innovation to support technological development and competitive advantage of firms.
4 M. COCCIA

rates – for both sexes (cf. Ferlay et al. 2013). This study assumes that the lung cancer is a relevant
problem and leading firms in the drug-discovery industry have a primary incentive to find solutions
(with innovative and effective anticancer drugs) to this unsolved problem in order to achieve the pro-
spect of a (temporary) profit monopoly in innovation-based markets. New consequential problems
and problem-solving activity can generate a main impetus for the development of innovations in
markets of anticancer treatments (cf. Coccia 2012a, 2012b, 2013a, 2014a, 2014b). Expected evidence
of the inductive study here is to instantiate the HPθ.
Overall, then, the conceptual framework here seeks to explain one of the sources of radical and
incremental innovations for competitive advantage of firms. It has also the potential to explain
one of the general and basic sources of the technological change in regimes of rapid change.

Evidence to support the hypothesis

The high mortality rate of lung cancer is a major unsolved problem that has had a critical impetus
for the development of innovative anticancer treatments. In order to substantiate the HPθ, case
study research here analyses the evolution of target therapies (vital radical innovations) for
lung cancer.

. Firstly, as said above, high mortality of the lung cancer is a relevant problem (unsolved) in society.

Irigaray et al. (2007) argue that the growing incidence of a variety of cancer in advanced countries
is due to several factors such as ageing of the population, progress in health technology, expansion of
diagnostic and screening programmes, and in particular to the diffusion of environmental carcino-
gens (cf. Coccia 2015a; Obe et al. 2011). In fact, cancer incidence (the number of new cases occurring
annually) increased by 85% from 1950 to 2001 (Zeliger 2011, 434; Coccia 2014d). Table 1 lists the four
main types of cancer that have the highest worldwide incidence and mortality (cf. Vineis and Wild
2014).
Lung cancer has the highest worldwide mortality rate (see Table 1, last column). Lung cancer can
be either small cell lung cancer or non-small cell lung cancer (NSCLC), with the latter representing
about 80–90% of cases. Risk factors include smoking (Buonanno and Ranzani 2013), passive
smoking (Payne 2001), concentrations of industrial air pollutants and carcinogenic agents (Wang
and Zhao 2011), fine atmospheric particulates (Raaschou-Nielsen, Andersen, and Beelen 2013;
cf. Molina et al. 2008), etc.

. Low effectiveness of chemotherapy-based drugs and new radical innovations for lung cancer treat-
ments. The current therapeutic treatments for advanced NSCLC are again mainly based on che-
motherapy agents (such as cisplatin and gemcitabine; carboplatin and paclitaxel, and so on).
However, this technology has low efficacy for lung cancer treatment since the mortality rate is

Table 1. Incidence and mortality of some cancer across worldwide population (both sexes).
Incidence Mortality
Cancer Number (%) ASR (W) Number (%) ASR (W)
Breast 1,671,149 11.9 43.1 521,907 6.4 12.9
Prostate 1,094,916 7.8 30.7 307,481 3.7 7.8
Lung 1,824,701 13.0 23.1 1,589,925 19.4 19.7
Colorectum 1,360,602 9.7 17.2 693,933 8.5 8.4
Note: Incidence data for all ages. Age-standardised rate (ASR W) is the number of new cases or deaths per 100,000 persons per
year. An age-standardised rate is the rate that a population would have if it had a standard age structure. Standardisation is
necessary when comparing several populations that differ with respect to age because age has a powerful influence on the
risk of cancer.
Source: GLOBOCAN 2012 (IARC) Section of Cancer Surveillance, http://globocan.iarc.fr/Pages/fact_sheets_population.aspx (16/1/
2015).
 TECHNOLOGY ANALYSIS & STRATEGIC MANAGEMENT 5

still high (19.7% ASR-W)4 in comparison with other cancers (see Table 1). In order to solve this and
other problems concerning the cancer, high R&D investments of advanced countries and leading
corporations have generated vital scientific advances in genetics, genomics and proteomics,5
which have laid the foundation for new therapeutic treatments for cancer, such as targeted
cancer therapies, which: ‘are drugs or other substances that block the growth and spread of
cancer by interfering with specific molecules involved in tumor growth and progression’ (as
defined by National Cancer Institute 2015). In particular, molecular biology has shown that
cancer cells display self-sufficiency of growth signals through the accumulation of genetic and epi-
genetic changes (e.g. Epidermal Growth Factor, EGF). The EGF acts by binding with high affinity to
the Epidermal Growth Factor Receptor (EGF-R) on the cell surface and by stimulating the intrinsic
protein-tyrosine kinase activity of the receptor, which ultimately leads to cancer cell proliferation.
The presence on lung cancer cells of EGF-R (in the exon6 19 and 21), identified by biomarkers,7 is
important to understand patient differences and a precondition for applying target therapies of
personalised medicine (cf., Singer and Marsh 2012). The first generation of target therapy for
lung cancer – a technological paradigm in lung cancer treatments – is based on the discovery
of the EGF-R blocking agents Gefitinib and Erlotinib to treat patients who have genetic EGF-R.
Two main radical innovations apply these blocking agents to solve the relevant problem of
high mortality for lung cancer: Iressa® (based on the blocking agent Gefitinib) by AstraZeneca
Company and Tarceva® (based on the blocking agent Erlotinib) commercialised by the Roche
Group. These path-breaking anticancer drugs are generating a revolution in therapeutic treat-
ments of NSCLC with EGF-R because they block-specific enzymes and growth factor receptors
involved in cancer cell proliferation (Laack, Sauter, and Bokemeyer 2010; Mitsudomi 2010, 101–
102; Mitsudomi et al. 2005; Coccia 2014d, 2012d).8 Patients with non-small cell lung cancer
treated with these target therapies (Gefitinib and/or Erlotinib) have significantly longer pro-
gression-free survival in comparison with patients who receive a combination of carboplatin
plus paclitaxel (chemotherapy agents). In addition, target therapy Erlotinib has the main effect
of reducing the mortality risk by 19% with an increase in median overall survival of patients, associ-
ated with lower toxicity (cf. Brugger et al. 2009).
. Consequential problem: the lung cancer can be resistant to these innovative drugs and grow by
angiogenesis (i.e. cancer cells grow by attracting new blood vessels to receive nutrients and
oxygen; cf. Reck and Crinò 2009). This new problem has induced, as solution, the emergence of
the second generation of target therapies for lung (and other) cancer (commercialised roughly
from 2014 onwards) that can block the growth of blood vessels feeding tumours9 – angiogenesis
– (Reck and Crinò 2009, 2). These anticancer drugs are multi-inhibitor blocking agents, such as the
target therapies nintedanib (triple angiokinase inhibitor) and afatinib dimaleate produced by the
Boehringer-Ingelheim company (Germany). In July 2013, afatinib dimaleate (commercial name
Gilotrif®) was approved by the U.S. Food and Drug Administration (FDA). Minkovsky and
Berezov (2008) show that afatinib dimaleate can be active against lung cancers resistant to the
first generation of anticancer drugs (i.e. Gefitinib and Erlotinib). Instead, Nintedanib, commercial
name Vargate, launched in 2015 for the treatment of NSCLC, can induce endothelial cell apoptosis.
Overall, this second generation of ground-breaking anticancer drugs is reducing lung cancer mor-
tality, increasing the survival of patients.
. A new consequential problem is that cancer can become drug resistant to previous target therapies
and grow with a new mutation. The first and second generation of target therapy (i.e. Gefitinib,
Erlotinib, Gilotrif, etc.) is effective for patients with NSCLC harbouring activating mutations in
the epidermal growth factor receptor (EGFR) kinase domain. However, studies in the biology of
the cancer show that it can become resistant to these new drugs (cf. Lovly, Horn, and Pao
2015). In particular, approximately 60% of patients typically relapse within 1–3 years of treatment
due to drug resistance to the first and second generation of target therapies. The drug resistance is
due to a secondary mutation (called T790M) that generates a progression of lung cancer with
several metastases. Currently, scientific research to solve the consequential problems of this
6 M. COCCIA

secondary mutation is supporting the third generation of inhibitors of mutant lung cancer and other
types of cancer (Clovis Oncology 2015). The first and second generation of target therapy is orig-
inally designed to target wild-type EGFR, whereas new target therapies in lung cancer are
designed for EGFR-mutant lung cancer. Clovis Oncology (a small US bio-pharmaceutical firm) is
developing some of these new drugs such as Rociletinib for the treatment of mutant non-small
cell lung cancer. In particular, Rociletinib is a novel, oral, targeted covalent (irreversible) inhibitor
to selectively target both the initial activating EGFR mutations and the T790M resistance mutation,
with an improved toxicity profile. Accordingly, it has the potential to be a first-line treatment in
NSCLC patients with activating EGFR mutations and a second or later-line treatment in NSCLC
patients who become resistant to previous therapies due to the emergence of the T790M second-
ary mutation (Clovis Oncology 2014, 2015). The biopharmaceutical company (AstraZeneca (2015a,
2015b) has generated a similar selective and irreversible inhibitor for mutant lung cancer: this new
anticancer drug is called TAGRISSO™—osimertinib (AZD9291) and was approved by US FDA in
2015.
. Future technological trajectories in lung cancer treatments and the potential emergence of a techno-
logical paradigm shift. New generation of target therapies treats EGFR-mutant lung cancer.
However, Thress et al. (2015, 560) analyze the new anticancer therapy AZD9291 by AstraZeneca
for EGFR-mutant lung cancer (a sub type of non-small cell lung cancer) and show new problems
that will affect the evolution of these innovative target therapies, that is: ‘diversity of mechanisms
through which tumors acquire resistance to AZD9291 and highlight the need for therapies that are
able to overcome resistance mediated by the EGFRC 797S mutation’. Moreover, cutting-edge
research is opening new scientific frontiers in treatments of oncology by developing therapies
based cancer-fighting viruses and T cells that can generate a technological paradigm shift in antic-
ancer drugs (cf. Ledford 2015).

Overall, the main evidence of this case study above seems in general to support the hypothesis
of problem-driven innovation that the origin and development of innovation (with technological
paradigms, different technological trajectories and paradigm shifts as well) can be explained by a
coevolution of consequential problems and problem-solving activity during the evolution of tech-
nology, ceteris paribus. The innovative anticancer drugs are highly directional and aimed at solving
specific problems. In particular, new target therapies embody the development of technological
solutions based on learning processes that generate a vital cumulative change for new technologi-
cal pathways directed to support the competitive advantage of firms in dynamic markets. In fact,
leading firms, in innovation-based markets – as in the drug-discovery industry – have the chief
incentive to find innovative solutions/products for unsolved problems in order to achieve the pro-
spective goal of a (temporary) monopoly of profits in markets. Figure 2 shows the evolution of new
target therapies for lung cancer as hypothesised. This hypothesis of problem-driven innovation,
described here, can explain one of the determinants of radical and incremental innovations in
drug discovery industry. In addition, this conceptual framework has also the potential to
explain a general source of innovation that supports the industrial and corporate change over
the long run.

Discussion
Sources of innovation in different industries are hardly known. This study endeavors, whenever poss-
ible, to show that radical and incremental innovations can be driven by a co-evolution of consequen-
tial problems and problem-solving activities during the evolution of technology.
The analysis of underlying determinants of major and minor technological breakthroughs in
anticancer drugs is a complex task but it is very important to explain some general driving forces
of technological change (Coccia 2012c; Gelijns and Rosenberg 1994, 30ff; Rosenberg, Gelijns, and
Dawkins 1995). This study suggests a model that explains one of the sources of radical and
 TECHNOLOGY ANALYSIS & STRATEGIC MANAGEMENT 7

Figure 2. Model of co-evolution of the technological paradigm of target therapy in lung cancer with consequential problems:
problem-driven innovations.
Note: Names of new drugs are underlined; in parentheses are the year/period of approval by health authorities in the US/Europe.

incremental innovations in competitive markets: the linkage between emergence of relevant/

consequential problems and their solution (i.e. coevolution of innovation with the evolution of
consequential problems). A principal contribution of this article is the strategic role in firms of
an efficient and rapid problem-solving activity of R&D labs. In fact, technical competence and
problem-solving activity are crucial for developing several innovations since they translate
environmental and organisational inputs into valuable new products and processes for competi-
tive advantage in markets (cf. Atuahene-Gima and Wei 2011, 81–82).10 Simon (1962) argues that
the problems solving involves a process of trial and error.
The more difficult and novel the problem, the greater is likely to be the amount of trial and error required to find a
solution. At the same time, the trial and error is not completely random or blind; it is, in fact, rather highly selec-
tive … to see whether they represent progress toward the goal. Indications of progress spur further search in the
same direction; lack of progress signals the abandonment of a line of search. Problem solving requires selective
trial and error. (Simon 1962, 472)

The analysis here displays similarities and differences with some approaches. Unlike stage-gate
model that represents an approach for the product development process (Cooper 1990; cf. Wuest
et al. 2014), the approach here explains a general determinant of innovation, which can be due to
the interaction between relevant/consequential problems and related solutions during the evolution
of technology. Moreover, the study here focuses on a technology development approach that has the
general goal of building new knowledge, whereas stage-gate model is rather a product development
approach for markets (Högman and Johannesson 2013). Hence, the approach here has main
elements of complementarity with established frameworks. Similarity of these approaches just men-
tioned is that both problem-driven framework here and stage-gate model support cooperation, col-
laboration and communication in organisations between stakeholders, managers and other experts
of a project/product/process.
Moreover, the theoretical framework of this study has the potential to be generalised for explain-
ing sources of different innovations. Others studies in different industries can support the findings
here. Ruiz, Jain, and Grayson (2012, 385ff) argue that new product development depends on accu-
rately identifying problems across consumers and the ‘problem-solving cycle’ is a key activity of pro-
totype-driven problem solving in heating products using information of users (Bogers and Horst
2014, 744). Restuccia et al. (2015) analyse the industrial equipment and supply sectors and also
show that the concept of product-related problems is a vital factor for new product development
and based on the role of distributors that can support the innovation during the product life-cycle
8 M. COCCIA

management. Critical problem-solving activity is also present in the semiconductor industry and it is
associated with the main variable of speed because in this specific industry, expeditious problem
solving of R&D lab is an important performance goal to support technological innovations with
short market life cycles (Appleyard, Brown, and Sattler 2006). Macher and Mowery (2003), in semicon-
ductor manufacturing, also find that the allocation of engineering resources to problem-solving
activities, associated with information technology and schedule production, influences new
process technologies and manufacturing performance (for public research labs cf. Coccia 2001a,
2003; Coccia and Rolfo, 2002).
In general, problem-solving competence is an important factor to develop in R&D labs to sustain
innovation and competitive advantage of firms. In particular, an efficient R&D management of firms
depends on the ability to speed up the activities of solving complex problems in the presence of
environmental turbulence (cf. Atuahene-Gima and Wei 2011). In short, the approach of problem-
driven innovation here seems to be a comprehensive framework with the potential of explaining
one of the general sources of technical change over time and space.
However, innovations are due to manifold factors. For instance, the learning process between
clinical research and clinical practice in drug discovery industry is also a vital factor that sup-
ports innovative products with the accumulation and advancement of technical knowledge in
specific research fields (cf. Gelijns and Rosenberg 1995b, 4ff; Gershon 1998; Kim and Nelson
2000; Morlacchi and Nelson 2011; Gelijns and Rosenberg 1995b, 67). Another factor for the
development of innovation is the dynamic capability: ‘the firm’s ability to integrate, build,
and reconfigure internal and external competences to address rapidly changing environments’
(Teece, Pisano, and Shuen 1997, 516; Helfat et al. 2007, 4; Coccia 2014b). Coccia (2016c) shows
that the technological evolution can be also due to technological parasitism and symbiotic
interaction between technologies. Innovations are also due to organisational learning, which
is a strategic process for competitive advantage of firms (Vera and Crossan 2004). Moreover,
managers with strategic leadership play a vital role for innovation processes of firms because
they inspire others with their vision, create excitement in groups and provide incentives for
achieving goals in competitive environments (Bass and Avolio 1990). Finally, new technology
can be also due to ‘inventive analogical transfer’ from experience and solutions of consequential
problems in one knowledge field – source domain – to other fields – target domains (Kalogerakis,
Lüthje, and Herstatt 2010, 418).

Concluding observations
The high mortality rate of lung cancer is a major unsolved problem that generates a main impetus for
firms in drug-discovery industry – characterised by technological and market dynamisms – to
develop path-breaking innovations of anticancer drugs. The inductive study here seems in general
to support the hypothesis that sources of radical and incremental innovations can be also explained
by a coevolution between relevant/consequential problems and problem-solving activities during
the evolution of technology, ceteris paribus. These findings seem to be also confirmed by other
studies, such as Coccia and Wang (2015, 155ff) show that:
the sharp increase of several technological trajectories of anticancer drugs applied by nanotechnology seems to
be driven by high rates of mortality of some types of cancers (e.g. pancreatic and brain) in order to find more
effective anticancer therapies that increase the progression-free survival of patients.

These ‘technological trajectories mortality driven’ are problem-driven by high mortality in pancreatic
and brain cancer. In short, relevant and consequential problems seem to be a main and general
driving force for the evolution of innovation in several industries. In fact, Roche (2015), a multinational
health-care company, claims that the research process has to find: ‘innovative solutions for serious,
currently unsolved medical problems’. Hence, leading firms in the drug-discovery industry have a
main incentive to find innovative solutions/products for unsolved problems in order to achieve
 TECHNOLOGY ANALYSIS & STRATEGIC MANAGEMENT 9

the goal of a (temporary) profit monopoly in a Schumpeterian world of innovation-based

competition.
The hypothesis of problem-driven innovation can explain a critical driving force of several inno-
vations in drug discovery industry and has also the potential to explain one of the general sources
of the technological change. Overall, the conceptual framework here contributes to integrate
current approaches of the sources of innovation in economics and management of technology
(Dixon 1997; Ruttan 1997; von Tunzelmann et al. 2008). In particular,

(1) The conceptual framework assigns a central role to relevant problems and their solution to
explain the emergence of path-breaking innovations that sustain the industrial change;
(2) The conceptual framework here is able to explain the development of technological trajectories
by solutions of consequential problems of initial radical innovation, based on learning processes
and act of insights in R&D labs of firms;
(3) Finally, the conceptual framework here is also able to show the vital function of the problem-
solving activity in the R&D management directed to solve problems that induces radical and
incremental innovation for sustaining and safeguarding extant competitive advantage of firms
in environment characterised by technological and market dynamism.

Hence, the conceptual framework here, substantiated in drug discovery industry, has several com-
ponents of generalisation that could easily be extended to explain the evolution of new technology
across several industries for supporting industrial and corporate change.
However, these results are of course tentative because this study provides a preliminary analysis of
some sources of specific radical/incremental innovations in markets with high technological compe-
tition. In fact, identifying the determinants of radical innovations in drug discovery industry is a
complex and problematic matter, since we know that other things are often not equal. To conclude,
this study shows that the co-evolution of consequential problems and problem solving activities in
R&D labs of firms can be a main source of innovation, but Wright (1997, 1562) properly claims: ‘In the
world of technological change, bounded rationality is the rule.’

Notes
1. This research began in 2014 at the UNU-MERIT (The Netherlands) and is further developed in 2015 and 2016 at
Arizona State University while I am a visiting scholar funded by National Research Council of Italy. This paper
benefited from helpful comments and suggestions by Christopher S. Hayter and two anonymous referees. The
author declares that he has no relevant or material financial interests that relate to the research discussed in
this paper.
2. Cf. Coccia (2004, 2014b, 2014e, 2006b, 2010b, 2015b, 2015c, 2016b) and Coccia, Finardi, and Margon (2012).
3. Dosi (1982, 152, original emphasis) posits that ‘“technological paradigm” as “model” and a “pattern” of solution of
selected technological problems based on selected principles derived from natural sciences and on selected
material technologies’ (cf. Dosi, 1988).
4. Age-standardized rate (W) is the rate that a population would have if it had a standard age structure. Standard-
ization is necessary when comparing several populations that differ with respect to age because age has a power-
ful influence on the risk of cancer (GLOBOCAN, 2012, http://globocan.iarc.fr/ –accessed February 2015).
5. Cf. Afshar (2003) and Fraser and Pai (2014). For countries with high R&D investment, see Coccia (2005, 2007,
2008a, 2008b, 2009c, 2009d, 2010a, 2010c, 2013b, 2015b); Rolfo and Coccia (2005).
6. An exon is the portion of a gene that codes for amino acids.
7. ‘A characteristic that is objectively measured and evaluated as an indicator of normal biological processes, patho-
genic processes, or pharmacologic responses to therapeutic intervention’ (National Institute of Health, as quoted
by Amir-Aslani and Mangematin 2010, 204)
8. The literature is vast and not fully cited here, but a good list of references is found in Dempke, Sutob, and Reck
(2010, 262–263, 271–274) and Coccia (2012d, 2014d).
9. The evolution of technological paradigms is also based on developing new technological trajectories by ‘inven-
tive analogical transfer’ from experience and solutions in one knowledge field—source domain e.g. a type of
cancer—to solve new problems in other fields -target domains e.g. other cancers (cf. Kalogerakis, Lüthje, and Her-
statt 2010, 418).
10 M. COCCIA

10. Cf. also Coccia 2001b, 2006a, 2008, 2009a, 2009e; Coccia and Cadario 2014; Coccia and Rolfo 2007, 2013; Coccia,
Falavigna, and Manello 2015; for public research labs see also Coccia 2001a, 2003; Coccia and Rolfo 1999, 2002, 2010.

Notes on contributor
Mario Coccia is a Senior researcher at the National Research Council of Italy and Visiting Scholar at the Arizona State
University (Center for social dynamics and complexity). He has been Research Fellow at the Max Planck Institute of Econ-
omics, Visiting Professor at the Polytechnics of Torino and University of Piemonte Orientale (Italy). He has conducted
research work at the Georgia Institute of Technology, Yale University, United Nations University – MERIT, University of
Maryland, Bureau d’Économie Théorique et Appliquée, University of Toronto, RAND Corporations and University of Bie-
lefeld. He has written extensively more than 280 papers in economics of science and technology, R&D management and
related disciplines.

ORCID
Coccia Mario http://orcid.org/0000-0003-1957-6731

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