Identification of technological discontinuities across industries and time periods: expected vs. unexpected change
by Miguel Angel Campo-Rembado, Alva H. Taylor
International Journal of Strategic Change Management (IJSCM), Vol. 1, No. 3, 2009

Abstract: How can researchers identify technological discontinuities across multiple industries without intensive data gathering that relies on subjective interpretation of performance and product data? This empirical difficulty has long hampered research on technological change. Here we provide a methodology to identify discontinuous changes in industries that does not rely on informed guesses. Does the type of innovation activity change after the arrival of a technological discontinuity? To identify the timing and magnitude of technological discontinuities, we assume that the volume of industry activity is simultaneously determined by the level of technological discontinuity and by the opportunity cost of capital, none of which we observe. Rather than identifying technological discontinuities as binary events, we identify them as the residual or unexpected component in the volume trajectory. We assess the external validity of the measure with a detailed analysis of railroad, wireless, and computer industries, and find that the residuals that identify our discontinuities also anticipate future jumps in product performance.

Online publication date: Tue, 07-Apr-2009

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