Generational Technological Change: Effects of Innovation and Local Rivalry on Performance

Abstract

We tested the effects of innovation and market complexity on firm performance. Generational technological change—a major advance within a technology regime—fosters the emergence of niches and local rivalry. Findings from the U.S. microcomputer industry between 1982 and 1991 suggest accelerated markets reward innovativeness that differentiates firms within a niche but not across niches. Changing niches confers a short-term penalty. Strong performers adopt new technology quickly, without changing niches.