Market Trajectory: A Suggested Interpretation of Innovation Opportunities for Latecomer Firms

Market Trajectory: A Suggested Interpretation of Innovation Opportunities for Latecomer Firms

Hongru Xiong (State Power Economics Research Institute & Research Center for Technological Innovation, Tsinghua University, China) and Guisheng Wu (Tsinghua University, China)
Copyright: © 2014 |Pages: 19
DOI: 10.4018/978-1-4666-4769-5.ch003
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Abstract

It is widely accepted that technological trajectory theory provides great implications of opening “windows of opportunity.” However, a person can merely find limited innovation opportunities for those latecomer firms from developing economies since he or she has to overcome many barriers during catching-up process. The authors put forward traditional trajectory theory and construct a new theoretical framework to explore the evolutionary rule of innovation itself, focusing on market perspective. The authors suggest that there exist market innovation and market trajectory. Not only presenting theoretical deduction for introducing this new framework, the authors also conduct several brief case studies to interpret innovation opportunities derived from market trajectory. The authors’ proposed model offers some new theoretical contributions and also important implications for barrier breakthrough and exploring innovation opportunities. Latecomer firms could utilize market trajectory to greatly broaden “windows of opportunities” and catch up, mainly through seizing low-end markets, or exploiting latent segmentation, or finding “blue ocean.”
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Introduction

The fundamental question for innovation research is of course to explain how innovations occur (Fagerberg et al., 2005). Most relevant literatures regard the technical change and technological commercialization as the main research target. Based on the concepts of natural trajectory (Nelson & Winter, 1982) and scientific paradigms (Kuhn, 1962), Dosi(1982) used technological paradigms and technological trajectory to explain the regularities in the process of technical progress, which brought about a series of crucial arguments on innovation barriers and opportunities for late-comers based on the technological trajectory theory. There is a prevalent view that late-comers do have lower entry barrier and more catching-up opportunities when new technological trajectory emerges, which means ‘windows of opportunity’ open at that time (Perez & Soete, 1988; Lee & Lim, 2001; Liu, 2008). Importantly, this proposition on innovation opportunities is mostly concluded with a technological perspective as ‘technological trajectory’ itself mainly addresses and explains the evolution of technical change in different industries, especially in science-based sectors.

However, two streams of new evidences from emerging economies in recent decades begin to challenge the traditional viewpoints. Firstly, new technological trajectories become much scarce, especially in mature industry (Utterback, 1994). Even when it does emerge, late-comers still find much difficult to catch that opportunity as restricted by weak technical accumulativeness, market disadvantage, unsound organizational foundation, inefficient learning capability, lack of complementary assets, institutional or policy environment and so on (Hobday, 1995; Gao, 2003; Amsden, 1989; Teece, 1986; Kim, 1997, Cusumano, 1985). The second challenge mainly appears as more and more latecomer firms emerged in the past several decades have made great success of catching-up and leapfrogging, with adopting various new ways of innovation other than technological catching-up. Abundant evidences show that developing countries are not constrained to choose only one way of catching-up, either technological catching-up or market catching-up (Li, 2007). New catching-up ways do exist and attract many research focus, such as disruptive innovation (Christensen, 1997).

Therefore, we can merely find limited innovation opportunities to catch up particularly for those latecomer firms from developing economies, based on traditional technological trajectory theory, since they have to overcome many barriers during catching-up and industrial upgrading process. Thereby, if following technological trajectory theory, we may miss some other kinds of catching-up opportunities. Since innovation itself is much more extensive than technological innovation (Schumpeter, 1934), we firmly suppose that there are some similar trajectories besides technological perspective.

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