Stock of downstream complementary assets as a catalyst for product innovation during technological change in the U.S. machine tool industry

Raja Roy, Susan K. Cohen

Research output: Contribution to journalArticlepeer-review

13 Scopus citations

Abstract

Research summary: We investigate the effect of incumbents' stock of downstream complementary assets on their product innovation during a disruptive technological change. We theorize that a firm's stock of downstream complementary assets, by providing critical information about shifting demand conditions, will play a catalytic role in firm adaptation during such a change. Using the advent of disruptive computer numerical control machine tools in the U.S. machine tool industry during the 1970s and 1980s as the context, we find that firms with greater stocks of downstream complementary assets are likely to be product innovation leaders during such a change. Managerial summary: Disruptive changes are challenging firms across industries. We concentrate on the U.S. machine tool industry during the 1970s and 1980s when Japanese manufacturers with disruptive computer numerical control systems challenged the U.S. manufacturers. We find that, under the threat of disruption, the greater the stock of downstream complementary assets a U.S. machine tool manufacturer has, the more likely it is to be the product innovation leader with the disruptive technology. Our findings provide novel insights for managers in companies that face disruptive changes and can help them avoid the consequences of such changes as predicted by prior research.

Original languageEnglish (US)
Pages (from-to)1253-1267
Number of pages15
JournalStrategic Management Journal
Volume38
Issue number6
DOIs
StatePublished - Jun 2017
Externally publishedYes

All Science Journal Classification (ASJC) codes

  • Business and International Management
  • Strategy and Management

Keywords

  • complementary assets
  • disruptive change
  • product innovation

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