The development of technological competence within firms: An evolutionary perspective

Abstract

The R&D function of the firm is thought of as a \u27black box\u27 process by scholars in both economics and strategic management. This dissertation shows that there is considerable potential in making the R&D function more transparent and that it is possible to model the intertemporal emergence of technological competence where technological competence, defined as the ability of a firm to create new products and processes, is a pioneering empirical investigation of concepts introduced to strategic management literature by Nelson and Winter (1982), Dierickx and Cool (1989) and Teece, Pisano and Shuen (1994). The central theme of this dissertation is to show that firms build technological competence in a path dependent manner and that this path dependence varies across firms. Firms demonstrate persistence in their research efforts which leads to their acquiring competence in the direction of these efforts. Further, this persistence in research efforts or outputs is a result of persistence in research inputs. This dissertation identifies three research inputs: research engines, knowledge domains and geographic location of knowledge. It offers empirical evidence of this persistence at both input and output levels within firms and goes on to suggest that differentials in persistence at input level translate into differentials at output level and consequently to differentials in technological performance of firms. This dissertation primarily uses patent data gathered on more than 100 firms from three industrial sectors viz. chemical, pharmaceutical and engineering and a smaller data set gathered on the optical disc technology industry. The techniques used include simulation, modified correlation analysis, survival analysis, and time series data analysis