Technology strategy and organizational learning: applying population ecology to understanding the influence on firm survival.

Author:Wilbon, Anthony D.
Position::Report
 
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INTRODUCTION

Developing management strategies in response to environmental fluctuations has traditionally been a theory proposed by leading thinkers in the field (Andrews, 1987; Ansoff, 1986). However, most today would agree that static, reactionary strategy formulation is nearly impossible to maintain in an increasingly volatile business environment. Technology has created a knowledge-based society where organizations have become very effective at learning how to alter their strategic approach continuously to maintain their competitiveness. The notion of organizational learning is not a new concept, and businesses must learn to apply it to not only strategy implementation, but also to management of its technological resources. Firms that successfully and aggressively convert their knowledge into tangible performance parameters increase the likely of sustaining a long term competitive advantage.

To consider an evolutionary perspective of organizational development, academicians must take a longer time horizon to study the effectiveness of strategy formulation on firm performance. Ultimately, understanding firm survival rates provides an insightful view of whether or not certain strategic models work as expected. One of the concepts that originated the longitudinal perspective, in particular studying organizational survival, is population ecology theory (Hannan and Freeman, 1977). Using the biological concept of natural selection, the theory considers firms as a collection and suggests that they increase their changes of survival through strengthening their internal organizational structure. The increased survival rate is attributed to an inertia that provides a stability which allows a firm to withstand tumultuous environmental changes (Aldrich and Marsden, 1988; Hannan and Carroll, 1992).

This paper argues that establishing core technology resources is a primary contributor to creating a structural foundation for many organizations in today's business. This assertion becomes significantly accurate when firms are facing environmental turbulence that threatens to disrupt normal operations. Technology management then becomes an exercise in designing strategies that strengthen the organization's technological core, rather than one that is reactive to development life cycles or environmental crisis as contingency theory suggested (Freeman and Hannan, 1989). Subsequently, firms must implement comprehensive strategies to effectively manage its technology competencies and to enhance its long term performance, and consequently, its survival rate. Through a synthesis of the literature on technology strategy, organizational learning and population ecology more perspective is provided into the appropriate level of research to understand the interconnection between the concepts.

THE TECHNOLOGY STRATEGY CONSTRUCT

Harrison and Samson (2003) posit that proper management of a company's technology directly impacts effectiveness and competitive status. This notion has been proposed by theorists in the field of strategic management who have long maintained a link between management of technology resources and creating sustainable competitive advantage (Ansoff and Stewart, 1967; Prahalad and Hamel, 1990; Rumelt, 1974; Teece, 1986). Thus, the strategic focus on development, acquisition, and management of technology has become the critical determination of competitive status, regardless of industry.

While early on researchers considered the fields of technology management and strategic management as separate areas of study that has changes over the years. Itami and Numagami (1992) stated that "Technology is the most fundamental of the core capabilities of a firm" (p.199) and that the interaction between strategy and technology had been treated as too narrowly and static, focusing more on the effect of current technology on firm strategy. At one point, in the technology management literature the primary focus was on R&D management at the firm level and the process of technological innovation at the industry level (e.g., Burgelman and Sayles, Nelson, 1988; Utterback, 1994). Others examined management of technology as a determinant of organizational structure (Eccles, 1981; Teece, 1986; Thompson, 1967).

Today, because of the significant influence that technology has on many business operations, researchers take a broader view and consider technology management as a complex activity that leaders must integrate into the strategic planning process. Itami and Numagami (1992) proposed three perspectives on the dynamic interaction between technology and strategy whereby: 1) strategy capitalized on technology; 2) strategy cultivates technology, and; 3) technology drives cognition of strategy. Traditional strategy research focused on the first perspective, which related to the rational planning model, while focus on the third becomes more process and organization-oriented. Considering that technology in some ways pervades most decisions made by organizations, researchers today, as well as practitioners, accepted that technology is a significant contributor to strategy cognition.

The integration of these two concepts, strategic management and technology management, has led to more literature on the combined construct of technology strategy. It often takes a multidimensional view and focuses on issues like the level of a firm's research and development investment, competitive positioning, technology networking, intellectual property protection, and leveraging of innovation as the primary competitive advantage (Kurokawa, Peic and Fujisue, 2005; Lin, Chen, and Wu, 2006; Meyer, 2008; Wade, 1995; Wilbon 1999). For example, the research finds that focus on R&D efforts tends to provide advantages in technology intensive industries, particularly those participating in networks or located in clusters (Barrios, Gorg, and Strobl, 2006; Drejer, 2005; Galbraith, Rodriguez, DeNoble, 2008). Similarly, substantial investment in product development and innovations has been posited as a providing technology leadership or first mover advantages. This relates to Porter's (1985a) differentiation strategy whereby firms strive to create a perception of uniqueness. Eisenhardt and Lyman (1990) studied the speed with which new ventures in the U.S. semiconductor industry ship their first product to market. Although the technology strategy concept was not their principle focus, they did find that in smaller firms, a formal organizational structure resulted in faster speeding products to market. Also, Bandbury and Mitchell (1995) provided evidence that first-to-market enhances market share and reduces failure rates, particularly when there are many followers.

As a result of this transition toward a more holistic view of technology strategy, there have been many attempts at defining it over the years. Generally, Porter (1985b) suggested that a technology strategy must address at least three broad areas: 1) what technologies to develop; 2) whether to seek technology leadership in those technologies; and 3) the role of technology licensing. In its simplest terms, Zahra (1996a) opined that a technology strategy articulates a firm's plans to effectively develop, acquire, and deploy technological resources that contribute to its competitive position and increases performance. Ford (1988) defined it as a formal plan for technology resources that guides long term decisions related to development, acquisition, implementation, and investment. Further, Wheelwright and Clark (1992) suggested that the objective of a technology strategy is to "guide the firm in acquiring, developing, and applying technology for competitive advantage" (p. 36).

As shown, the authors provide varied efforts on some levels, but overall the definition of the concept is somewhat consistent. However, the idea that provides the most comprehensive view adapts Andrews (1987) definition for business strategy, and states that: "technology strategy is a pattern of decisions that sets the technological goals and principal technological means for achieving both those technological and business goals of the organization" (Adler, 1989, p.2).

The literature also includes several conceptual typologies relating technology and strategy that have proven useful. However, many of the typologies have minimal empirical foundation to support the theoretical assumptions. Much of the earlier conceptual literature focused on technology posture or the pioneer-follower posture only, as pointed out earlier. Adler (1989) cautions that these posture oriented approaches focus to heavily on product technology only and the fact that firms apply different postures to different technology activities. Also, the emphasis of most empirical support for these models is on high technology industries. For instance, the classic Ansoff and Stewart (1967) research studied high technology manufacturing businesses and their effects on business strategy and management structure and found that to achieve optimal profitable results firms must formulate a technology strategy based on a systematic analysis of its technological profile.

As a result of the attention received from the technology strategy ideology, Zahra and Covin (1994) concluded that the literature had at least three areas that future research should address. First, more empirical analysis is needed because the bulk of existing literature then, and now, is conceptual (Adler, 1989; Burgelman and Rosenbloom, 1989, Maidique and Patch, 1988; Morone, 1993; Porter, 1985, Teece, 1986). Several studies emerged over the years to validate the many technology strategy concepts and address the empirical deficiency (Hampson, 1994; McCann, 1991; Zahra and Covin, 1994; Zahra, 1996a, 1996b, Wilbon, 1999; Zahra and Bogner, 2000). Nevertheless, further empirical examination is still needed as the knowledge in the field matures based on the emerging strategies firms created to handle rapid...

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