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Resource Reconfiguration During Technological Change

, John E. Prescott

Abstract: A central strategic imperative for surviving technological change requires firms to attenuate the inertia and rigidity imposed by its legacy technology orientation (defined as the relative emphasis placed on technological knowledge and products aligned to an incumbent technology) and successfully transition to a new technology. We theorize that resource reconfiguration through corporate scope decisions—alliances, acquisitions, divestitures, and different postacquisition integration approaches—enables firms to achieve the twin requirements of attenuation and transition. Initially, a legacy technology orientation exerts inertia due to legacy reinforcement—decreasing the likelihood of firms making new technology acquisitions and legacy technology divestitures. New technology alliances mitigate this inertia via legacy attenuation—increasing the likelihood of acquisitions and legacy divestitures. Finally, when firms make new technology acquisitions, we theorize that acquirers choosing partial acquisition integration approaches (partial integration and partial autonomy) are more likely to achieve a successful transition to the new technology-legacy transition and, thus, more likely to survive technological change relative to firms choosing full integration or full autonomy. Using a sample of firms from the digital camera product market over 1991–2006, we found strong empirical support for our predictions. We contribute to research on technological change by demonstrating that firms may overcome the inertia of a legacy technology orientation and adapt to an emerging new technology by employing corporate scope decisions and postacquisition integration as resource reconfiguration mechanisms. Specifically, we advance the novel finding that postacquisition integration is an important survival-enhancing mechanism that facilitates adaptation to technological change.
Keywords: survive / legacy / corporate scope decisions / orientation / inertia / technological / new technology

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