Abstract

The major challenge for young technology-based firms (YTBFs) is to convert the innovative and rare knowledge they possess into a value-creating opportunity. Technological radicalness is one of the key characteristics of their technology base as it indicates the degree to which a technology differs from the state of the art. For YTBFs their technological environment conditions are important as industries develop along evolutionary paths.

Building on opportunity theory we hypothesize that two counteracting effects result from the pace of technological development which paradoxically both favor YTBFs with a radical technological base: (1) A fast technological development will erode the technological base of those firms that cannot discover new opportunities. Rapid technological change is competence destroying for incumbent firms and established industries but offers new opportunities for YTBFs. (2) A radical technology base builds a fertile ground for reconfiguring and redefining prior knowledge that leads to the creation of opportunities. At the same time, in case of rapid technological progress, YTBFs employing a radical technological base may gain easier access to complementary resources necessary for experimenting, learning, and adaptations.

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