Knowledge, firm boundaries, and innovation: Mitigating the incumbent's curse during radical technological change

We explore the relationship between a firm's organization and its ability to face a radical technological change. We suggest that, during such a change, the presence of both in-house upstream knowledge and downstream market linkages, within a firm's boundary, has its advantages. We test our predictions in the context of the robotics industry where manufacturers of mechanically controlled brawny robots, which were valued mainly for their payload capacity, faced the advent of electrically controlled brainy robots that emphasized accuracy and repeatability. We find that preadapted firmsthe ones with prior relevant technological knowledge and with access to internal users of brainy robotswere the innovation leaders in the emerging new technology but were laggards in the old technology. Copyright (c) 2014 John Wiley & Sons, Ltd.