In: Operations Management
Are well-established firms or new entrants more likely to a) develop and/or b) adopt new technologies? What are some reasons for your choice?
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Subject: Management of Technological Innovation
Well established firms are the firms that have already established research & development function that facilitates the innovation and creativity at the organizational level. It means that well established firms are more likely to develop the new technologies. There are many reasons that propel the established firm to go for development of the new technologies. The first reason is the competitive advantage that can be created by the developed new technologies. It brings proprietary rights upon the technologies, preferred by well-established company. The second reason is that well-established companies already use some technologies and it is easier to for the incremental development and these companies have allocated budget to spend upon the R&D initiatives. As a result, they build upon what they already have as technological achievements. The third reason is that these firms strive more of the disruptive technologies that is only possible when the firms go for the development path. It results into the creation of new designs, architecture, process and product forms. The incentives in the form of copyrights, patent and other exclusive ownership can only come when they go for the development of new technologies.
In contrast to it, new entrants would like to adopt new technologies and it happens due to the many reasons. The first reason is the cost being incurred in development part, though the success is not guaranteed. New entrants have limited budget and they want to be assured of the acquisition of the new but proven technology. So, they adopt new technologies that are already proven to be successful. It makes them to have money well spent. The second reason is that new entrants want to build their own position in the market and want spend more on development of framework and process so that they can work upon it to succeed. Further, it is important for them to build a team and develop a robust revenue & business model first that can bring operational sustainability. So, the preferences are different for the new entrants that make them go for the adoption of new technologies. Besides, the developed new technologies are only beneficial when they are used at a higher scale and it is not possible for the new entrants. Hence, new entrants are more likely to adopt new technologies, whereas well established firms go for the development of new technologies.