Customer power, strategic investment, and the failure of leading firms

Article Abstract:

A model describing how leading firms eventually lose their dominant positions in the face of technological innovation is presented. Based on resource-dependence and resource-allocation theories, this model outlines the process through which customer demands influence the distribution of resources in technological innovation. Grounded in a study of the global disk drive industry, this paradigm demonstrates that major firms were industry leaders in the development of technologies that addressed the existing needs of customers. However, these same firms are shown to fail to create simpler technologies that at first were only applicable in emerging markets. Initiatives aimed at technologies for which no customers still exist are delayed for absence of impetus and resources. In contrast, companies that produce technologies initially useful in emerging markets but eventually applicable in the mainstream outperform leading companies.

Magnetic and Optical Recording Media Manufacturing, Electronic components, not elsewhere classified, Standard Magnetic Disks, Computer peripherals industry, Technological innovations, Market share, Magnetic disks

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Modeling, game theory, and strategic management

Article Abstract:

The use of modeling techniques based on game theory could be quite valuable in the development of strategic management theory. The use of such modeling techniques requires an examination of the roles these game-theoretic models are expected to have in strategic management research. Two possible roles can be defined, the literal and the metaphorical, based as they are on the two common approaches to modeling. An examination of the nature of these game-theoretical models reveals that literal interpretations of such models are largely irrelevant in the study of competitive strategy. However, the use of metaphorical interpretations of models have the potential to provide a rich source of insights relevant to strategic management issues as they can provide a qualitative framework through which the competitive behavior of firms can be analyzed.

Game theory

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