We focus here on firms and broad technological trajectories. This is because firms and industrial sectors differ greatly in their underlying technologies. For example, designing and making an automobile is not the same designing and making a therapeutic drug, or a personal computer. We are dealing not with one technology but with several technologies each with its historical pattern of development, skill requirements and strategic implications. It is therefore a major challenge to develop a framework for integrating changing technology into strategic analysis that deals effectively with corporate and sectoral diversity. We describe below the framework that one of the US has developed over the past 10 or more years to encompass diversity. It has been strongly influenced by the analyses of the emergence of the major new technologies over the past 150 years by Chris Freeman and his colleagues David Mowery and Nathan Rosenberg.
A number of studies have shown marked, similar and persistent differences amongst industrial sectors and directions of technological change. They can be summarized as follows:
Size of innovating firms: Typically big in chemicals, road vehicles, materials processing, aircraft and electronic products and small in machinery, instruments and software.
Type of product made typically price sensitive in bulk materials and consumer products, and performances sensitive in ethical drugs and machinery
Objectives of innovation: typically product innovation in ethical drugs and machinery; process innovation in steel; and both in automobiles
Sources of innovation: suppliers of equipment and other production inputs in agriculture and traditional manufacture (like textiles) customers instrument machinery and software in house technologies activities in chemicals, electronics, transport machinery instruments and software and basic research in ethical drugs.
Locus of own innovation: R&D laboratories in chemicals, electronics, production engineering, departments in an automobiles and bulk materials design offices in machine building and systems Departments in service industries (e.g. banks and supermarket chains).
In the face of such diversity there are two opposite dangers. One is to generalize about the nature, source, directions and strategic implications of innovation on the basis of experience in one firm or in one sector. In the case there is strong probability that many of the conclusions will be misleading or plain wrong. The other dangers are to say that all firms and sectors are different and that no generalizations can be made. In this case, there can be no cumulative development of useful knowledge. In order to avoid these twins dangers, one of us distinguished five major technological trajectories each with its distinctive nature and sources of innovation and with its distinctive implications for technology strategy and innovation management. This was done on the basis of systematic information on more than 2000 significant innovations in the UK, and of a reading of historical and case material. We identify for each trajectory its typical core sectors of technological accumulation and its main strategic tasks.
Thus, in supplier dominated firms, technical change comes almost exclusively from suppliers of machinery and other production inputs. This is typically the case on both agriculture and textiles, where most new techniques originate in firms in the machinery and chemical industries. Firms technical choices reflect input costs, and the opportunities for firm specific technological accumulation are relatively modest, being focused on improvements and modifications in production methods and associated inputs. The main task of innovation strategy is therefore to use technology from elsewhere to reinforce other competitive advantages. Over the past 10 years advances elsewhere in IT have opened up radical new applications in design, distribution, logistics and transactions thereby making production more responsive to customer demands. But since these revolutionary changes are available from specialized suppliers to all firms it is still far from clear whether they can be of a lasting advantage for firms competing in supplier dominated sector.
Source: Managing Innovation