The degree of technological innovation: A demand heterogeneity perspective

A perennial question posed by work in the technology management domain is whether a firm should deploy a technology more advanced than its current one. While past research has provided us with a better understanding of the firm-level decision to invest in new technology, the degree of this advancement (relative to the technology inherent in existing company product offerings) remains a nascent phenomenon that the field has not fully addressed. Data on global flat panel display makers from 1995 through 2011 are analyzed to understand how competitive standing in distinct intra-industry technology segments affects a firm's degree of technological innovation. We adopt a demand heterogeneity perspective to develop hypotheses relating the degree to which more advanced technology is deployed to a firm's competitive share of a particular segment. Our findings demonstrate how segment share (a more refined unit of analysis than overall market share) encourages a firm to advance its technology and how intra-segment competition moderates this direct effect. The current study provides evidence that demand heterogeneity is operative not only at different stages of the technology life cycle, but also in different segments populated by users with divergent technological requirements.