M. L. Tushman and P. Anderson, "Technological discontinuties and organizational environments", Administrative Science Quarterly, 31 (1986), 439-65.


Summary:

These researchers further elaborate on the community ecology model by postulating that most community change occurs soon after a discontinuous technological innovation. Furthermore, they hypothesize that these discontinuities affect the community differently depending on the competence-enhancing or competence-destroying qualities of the technological innovation.

Competence-enhancing innovations exploit existing skills and knowledge within the community. These innovations serve to consolidate industry leadership in the larger organizations and hinder the development of new organizational forms.

Competence-destroying innovations spur the creation of new organizational forms that can quickly acquire and utilize the new technologies. Large, well-established organizations with too much inertia to adopt the new innovations suffer and lose their dominance.

Tushman and Anderson support these hypotheses by identifying key discontinuities and their effects in three industries -- airlines, cement, and minicomputers. The results confirm their view that competence-enhancing innovations consolidate the industry, and competence-destroying innovations fragment the industry.


This paper is about patterns of technological change and impact of technological breakthroughs on environmental conditions. Technology evolves through periods of incremental changes punctuated by technological breakthroughs that either enhance or destroy the competence of firms in an industry. Competence-destroying discontinuties are initiated by new firms and cause environmental turbulence, competence-enhancing discontinuties are initiated by existing forms and reduce turbulence.

Little research conducted on how competitive environments change over time. Technology affects the rise and fall of populations within organizational communities.

Technology "can be defined as those tools, devices, and knowledge that mediate between inputs and ouputs (process technology) and or that create new products or services (product technology). Technology seems to evolve in sreponse to the interplay of history, individuals, and market demand. Technological progress constitutes an evolutionary system punctuated by discontinous change. Technological experimentation and competition persistss within a product class until a dominant design emerges".

After a dominant design is evolved, improvement becomes incremental. When there are discontinuities, they usually offer distinct price-performance improvements over existing technologies.

Competency-destroying discontinuties require new skills, abilities, and knowledge in either process or product design. The skills needed for the core technology shift, causing power and structure shifts in organizations. They are usually initiated by new firms.

Competene-enhancing discontinuties are "order-of-magnitude improvements in price-performance that build on existing know-how within a product class". These discontinuties tend to consolidate industry leadership.

Technology changes affect environments through uncertainty (level of predictability) and munifence (extent to which an environment can support growth). Both will be higher after a discontinuity. Competency-enhancing changes will cause lower entry-to-exit ratio as smaller firms are squeezed out. Competence-destroying changes will have increase entry-to-exit ratios as new firms capitalize on changes established firms can't quickly adapt to.

Firms that initiate major technological change will have higher growth rates than other firms in the product class.

 

Research Design

They studies airplane transport, portland cement, and minicomputer manufacture. They reviewed various data sources for firm entry and exit and timing of technological changes. Price performance was measured by seat -mile-per year, barrel per day kiln capacity, and time per computing cycle. Uncertainty was based on forecasting error. Munifence was measured by total sales growth.

 

Results

The discontinuties inall three industries support the hypothesis . Periods of statbility were punctuated by big discontinuities. Competence destroying changes were done by new firms, enchancing changed by existing firms (and created barriers to entry).

Discussion

"Organizations that are able to adopt technological change quickly maximize their probability to being able to move with a changing technological fronteir".