Vicarious Learning in New Product Introductions in the Early Years of a Converging Market

Authors:
Raji Srinivasan;Pamela Haunschild;Rajdeep Grewal
Affiliations:
Red McCombs School of Business, University of Texas at Austin, Austin, Texas 78712-1176;Red McCombs School of Business, University of Texas at Austin, Austin, Texas 78712-1176;Smeal College of Business Administration, Pennsylvania State University, University Park, Pennsylvania 16802
Venue:
Management Science
Year:
2007

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Abstract

Technological developments combine previously distinct technologies that result in converging markets. In converging markets, firms from different industries compete against each other, often for the first time. We propose that firms introducing new products in converging markets will learn vicariously from other firms in the market. Further, we propose that this learning will vary across the dual-technology frontier (DTF), where the high-technology frontier (HTF) and low-technology frontier (LTF) map onto innovative activities driven by technological opportunity and user needs. We propose that at the HTF, local search will dominate and firms will be influenced by HTF product introductions of similarly sized, successful firms. At the LTF, learning will occur across the DTF, vary by origin industry of the firm, and be affected by complementarities in routines and capabilities and market competition among firms. We test the proposed model of vicarious learning using panel data on new product introductions of 67 firms in the U.S. digital camera market in the 1990s. Findings generally support our proposed model of vicarious learning in this market. They show heterogeneity in vicarious learning across the technology frontier and firm characteristics---including the origin industry of target firms. Our results show that vicarious learning in new product introductions in converging markets---which includes both mimetic and nonmimetic learning---is similar in some ways, but different from more traditional markets. We conclude with a discussion of the implications of our findings for theories of organizational learning, new product development, and converging markets.