Decoupling market incumbency from organizational prehistory: locating the real sources of competitive advantage in RandD for radical innovation

• Published in: Strategic management journal Vol. 34; no. 2; pp. 245 - 255
• Main Author: Sosa, M Lourdes
• Format: Journal Article
• Language: English
• Published: 01.02.2013
• Subjects: Innovation; Market; Organization theory; Organizational change; Organizational effectiveness; Research and development
• DOI: 10.1002/smj.2012
• ISSN: 0143-2095

The creative destruction literature has argued that differences in RandD performance of incumbent vs. entrant firms can be explained through organizational change theories about established vs. de novo firms. A disconnect exists between these theories and the available empirical evidence because often the best performing firms are established firms as well. I propose to resolve this disconnect by distinguishing between market incumbency (presence in a market prior to a discontinuity) and organizational prehistory (organizational experience prior to a transition, whether between technologies or between markets). Doing so allows me to contrast incumbent vs. entrant and de alio vs. de novo studies, and to suggest more robust future research designs. I illustrate my proposition using qualitative data from the anticancer and AIDS-treatment drug markets. Copyright © 2012 John Wiley & Sons, Ltd. Copyright John Wiley & Sons. Reproduced with permission. An electronic version of this article is available online at http://www.interscience.wiley.com