Exploiting the dynamic links between competitive and technology strategies

European Management Journal Vol. 17, No. 2, pp. 188–203, 1999 1999 Published by Elsevier Science Ltd. All rights reservedPergamon

Printed in Great Britain0263-2373/99 $19.00 1 0.00PII: S0263-2373(98)00078-4

Exploiting the DynamicLinks betweenCompetitive andTechnology StrategiesSHAKER ZAHRA, Georgia State UniversityRAJENDRA SISODIA, Bentley College, MassachusettsBRETT MATHERNE, Georgia State University

To date, two perspectives have dominated thinkingabout the connection between competitive and tech-nology strategies. The first espouses a hierarchicalview in which a company’s competitive strategyand internal capabilities jointly determine its tech-nological choices. The second perspective viewstechnology as a subset of organizational resourcesand one of several vital strategic weapons a com-pany can use to pursue its competitive goals. Unfor-tunately, both perspectives are static in nature. Thisarticle proposes a third perspective that builds onthe dynamic interplaybetween a company’s com-petitive strategy and tech-nology. The articleargues that,because

European Management Journal Vol 17 No 2 April 1999188

technology and strategy variables influence oneanother in a continuous loop, both variables shouldembody an element of ‘prospecting’, allowing noveldevelopments to evolve. The dynamic interplaybetween a company’s technology and competitivestrategies emphasizes the importance of organiza-tional learning and exploiting the knowledge cre-ated in this process. The article concludes by dis-cussing the implications of the dynamic perspectivefor executive action, highlighting industry forcesthat may impact the dynamic strategy – technology

relationship. 1999 Published by ElsevierScience Ltd. All rights reserved

Success in today’s dynamicmarkets requires the

effective use of acompany’s

technologi-cal

EXPLOITING THE DYNAMIC LINKS BETWEEN COMPETITIVE AND TECHNOLOGY STRATEGIES

resources. Whether embedded in products, processes,equipment or the know-how of employees, techno-logical resources are of little value unless they arelinked to a company’s competitive strategy. Techno-logical resources not only underlie a company’s strat-egy, they can also guide the development of its com-petitive advantage (Kusunoki, 1997). Successfulcompanies recognize the importance of this link fordefining and building their technological skills andcapabilities (Abetti, 1997a, b; Bowonder andMiyake, 1997).

The need to link a firm’s technological and strategicchoices has been recognized for years in the litera-ture.1 However, the literature does not offer execu-tives much guidance on how companies can exploitthe dynamic interrelationships between their techno-logical resources and competitive strategies. Indeed,some researchers continue to depict the process oflinking technology and strategy as orderly andsequential, thereby failing to recognize the complexrelationship that might exist between these variables.This dynamic, interactive relationship creates bounti-ful opportunities to be exploited in mapping a firm’sstrategic choices.

Yet, as companies pursue particular technologicaldevelopments, the same process creates seriousorganizational tensions while staying within the con-straints imposed by their industries. While some ofthis tension is destructive, it can also create opport-unities for companies to change their business defi-nition and competitive approach, and achieve con-siderable growth and profitability. Publishers ofprinted media all over the world, for example, havehad to revise the traditional concept of their busi-nesses because of the rapid dissemination of elec-tronic media. After years of experimentation, mediacompanies are starting to learn how to capitalize onthe opportunities offered by the new technology.Understanding and using the new technology, how-ever, has required these companies to undergo pain-ful ‘soul searching’ to redefine the nature of theirbusinesses, re-examine their strategic missions, andreassess their strategic options. Insights from theseanalyses have given these companies deeper appreci-ation of innovative uses of the electronic media.Computer mainframe producers and pharmaceuticalcompanies are undergoing similar transformationstoday.

Managing the tension that develops in the relation-ship between a firm’s technological resources andtheir strategic choices is one of senior executives’most serious challenges (Berry, 1998). Effectiveexecutives understand and use the dynamic interplaybetween their company’s technology and competitivestrategy to build, sustain or revise their firm’s com-petitive advantage. Executives also need to seeopportunities in the misfit that sometimes charac-terizes the interplay between the firm’s technologyand its strategies. To do so, we believe managers

European Management Journal Vol 17 No 2 April 1999 189

need to abandon the static views that have domi-nated their thinking on linking the firm’s technologyresources and strategy, i.e. thinking about technologymanagement cannot be separated from competitivestrategy (Kanter et al., 1991). One problem is thatresearch into these issues has, for the most part, pro-gressed along separate lines — leading to a seriousvoid in the literature. As Morone has aptly observed:

Contemporary thought about technology strategy placesdecisions about company technology in the context of com-pany strategy, but it stops short of treating company strat-egy itself — and the closely associated decision-makingpractices of general management — as a variable in theprocess of building, or failing to build, advantages on thebasis of technology. This implies that business strategy isseparate from company technology, and that technology issolely a means to the goals set out in business strategy.2

Executives can build new organizational capabilitiesby considering and capitalizing upon the dynamicinterplay between their firm’s technology and com-petitive strategies. Indeed, with the ever-growinginterest in the strategic role of technology, executivesneed to recognize the intimate and dynamic relation-ship between a company’s technology resources andcompetitive strategy. This will require managers toconsider the opportunities created by the fit and mis-fit between their company’s technology and strategy.This misfit signals the beginning of a strategic changein the company’s operations, the way the companyviews its resources and competitive advantage, andthe approach it uses to reshape the evolution of itsindustry.

The British telecommunications industry provides anexample of the strategic implications of effectivelymanaging the misalignment between a company’scompetitive and technology strategy. For decades,British Telecom (BT) enjoyed a monopoly that insu-lated it from the competition position in its industry.However, with deregulation, BT has come to faceincreased competition in its domestic market. Thiscompetition threatens BTs traditional competitiveadvantages, which include their strong brandnamerecognition, extensive database of customers andcomprehensive network connections throughout theUK. Realizing that their new global competitors havesuperior and more innovative technologies, BT haslooked for ways to protect their domestic marketswhile attracting customers from around the globe. BTunderstands that competitive success in the emergingglobal telecommunications industry demandsbundling multiple technologies, a skill the companydoes not currently possess. The gap between BT’scompetitive aspirations and internal technologicalresources has prompted the company to acquire tech-nologies that have been developed elsewhere. Inturn, the use of externally generated technologies hashelped BT to consider the introduction of many newservices that the company has not previously con-sidered (Morone, 1993).

This article views the link between the company’s

Technology, however

sophisticated, cannot protect a

firm’s competitive advantage

indefinitely


technology and competitive strategy as an ongoing,dynamic, two-way process that can reshape a firm’sevolution and self-concept. To explain this view, thearticle first reviews two dominant perspectives onthese links, identifying both their contributions andshortcomings. After describing and presenting thedynamic perspective, the article outlines how compa-nies can gain significant advantages by dynamicallylinking their technological resources and competitivestrategy. The impact of the company’s external tech-nological environment on its competitive strategy isalso reviewed. Finally, the article discusses the mana-gerial implications of the dynamic view on the linkbetween a company’s technology and strategy.

Two Perspectives on the Technology –Strategy Link

Effective management of a company’s technologicalresources requires the development and implemen-tation of a sound technology strategy. This strategyembodies several components: a company’s techno-logical posture (whether it pioneers or follows tech-nological change in its markets); technology sourcing(internal to the company orexternal through acquisitions,strategic alliances or licensingagreements); technology port-folio (the technologies emphas-ized or offered by the organiza-tion over time); and distinctivetechnological skills andresources (such as talentedexperts or staff). Links betweena company’s technology and competitive strategy areusually clarified in its ‘technological strategy’. Theefficacy of a company’s technology strategy usuallyreflects its ability to create an enduring competitiveadvantage: one that can give the firm superior marketand financial performance. This advantage emergesfrom the firm’s increased flexibility in operations,responsiveness to customer needs, and growinginnovativeness.

Traditional views on the relationship between a com-pany’s competitive and technology strategy haveemphasized two different perspectives: hierarchicaland resource-based. These two perspectives espousedifferent views of technology, offer different pre-scriptions for effective technology strategies, andidentify different sources of competitive advantages.Understanding these two perspectives, therefore, isan important first step toward appreciating the mer-its of the dynamic view presented later in this article.

The Hierarchical Perspective

Traditionally, a company’s external environment andits internal skills, resources and capabilities were


believed to provide the starting point for formulatingits competitive strategy (Stonham, 1998a, b). Thiscompetitive strategy embodies the company’s formallong-term plan which typically outlines its goals,scope of business, and the way the company intendsto achieve its goals. Each competitive strategy favorsa particular technological orientation. Thus, asdepicted in Figure 1, a company’s technology strat-egy is expected to flow directly from a clear under-standing and enunciation of its strategic prioritiesand competitive objectives. Further, when competi-tive strategy drives technology strategy, the companycan define the source of its competitive advantage inthe form of low costs, product differentiation, orboth. Developing this advantage can allow the com-pany to achieve superior financial performance rela-tive to its rivals. Clearly, this perspective places muchemphasis on understanding the competitive contextof the firm and its senior executives’ vision indeveloping the right competitive and technologystrategies. It also highlights the need for technologi-cal choices that reflect the demands of the competi-tive strategy.

Over the years, companies have applied thisapproach with great success. For one thing, it

emphasizes a need to under-stand the demands of the com-pany’s external environmentand incorporate them into itstechnological choices. Also, thesequential nature of this view isan attractive feature insofar asit matches the division of laborin some companies. Differentpeople, therefore, are expected

to be involved in making different decisions at differ-ent stages depending on their skills. This sequentialview is also compatible with the definition of formalpower in the traditional organizational hierarchy.

However, the hierarchical approach has seriousdrawbacks. Over the years, this sequential decision-making process that has prevailed in some compa-nies has isolated the formulation and implementationof technology strategy, possibly diluting some basesof competitive advantage (Lampel et al., 1996). Theseparation of technological and competitive stra-tegies can also be counterproductive, slowing downdecision-making and strategy implementation(Bessant et al., 1996; Conway, 1995). Similarly, theassumption of a rational process of competitive andtechnology decision-making which has sometimesresulted in a failure to recognize how political,organizational, and idiosyncratic forces influence acompany’s technological innovation.

The proponents of the hierarchical perspective havesometimes failed to recognize that technology stra-tegies, like other important organizational choices,are politically negotiated outcomes. The creation,acceptance and adoption of a new technology strat-


Figure 1 The Hierarchical View of Technology Strategy

egy is a socio-political process that requires attentionto the value system that dominates the firm’s culture.It also demands an appreciation of the competitivenature of a company’s markets as well as linkingtechnological assets with the firm’s other resources.Technology, however sophisticated, cannot protect afirm’s competitive advantage indefinitely. Clearly,there is a need for an alternative perspective, one thatrecognizes the inter-connectedness of a firm’s techno-logical resources with its other assets. The resource-based perspective, discussed in the following para-graphs, offers one such view.

The Resource Perspective

This view holds that technology strategy is a compo-nent or subset of the company’s resources and capa-bilities that provide the foundation for a distinctivecompetence from which a competitive strategy can bedeveloped.3 Technology, defined as the firm’s know-how, is viewed as one of the most crucial weaponsa company can deploy in pursuit of its strategicobjectives. Accordingly, companies and their execu-tives should coordinate their technological and com-petitive choices in order to achieve superior perform-ance. Companies need strategies that capitalize onthe synergy between their technology and otherresources. Alignments in the company’s competitivestrategy should also reflect the evolution of a com-pany’s technology and other resources (Figure 2).

Following this view, the starting point in creating acompetitive advantage is to identify and classify afirm’s resources, especially its technology (Grant,1991). Next, the company should determine its tech-nological capabilities by determining which of its


Figure 2 Technology as a Component of CompetitiveStrategy

resources surpass those of the competition as well aswhat the company does better, technologically, thanits rivals. To conduct an effective analysis, executivesshould appraise the ‘profit-generating’ potential oftheir company’s technological resources, exploreways in which the technology can generate an endur-ing competitive advantage, forecast the conditionsthat favor the release of the technology, and estimatethe potential market. Executives must also identifythe strategic actions needed to position their tech-nology in the market.


Initially, the firm must identify and classify its tan-gible and intangible technological resources, whichare crucial elements for creating and sustaining afirm’s competitive advantage. Tangible technologicalresources, such as the company’s machines andequipment, can be used to map a competitive strat-egy. Intangible technological resources, such as thefirm’s proprietary technology and skilled researchers,can also guide the development of the competitivestrategy and, therefore, create a competitive advan-tage. These intangible resources, which are difficultfor outsiders to observe and understand, can formthe centerpiece of a firm’s competitive strategy. Thecompetitive advantage derived from intangible tech-nological resources can be enduring, because com-petitors cannot always duplicate the capabilitiesderived from these resources. In turn, this allows thecompany to retain its market and technologicalsuperiority (Bailey, 1998; Kotha, 1998; Christensen,1995; O’Brien and Smith, 1995; Rogers, 1996). Evi-dence of the importance of intangible technologicalresources can be witnessed in companies, such as Bri-tish Petroleum (BP), Merck, General Motors, Genen-tech, IBM, and Microsoft, that are investing heavilyin building their intellectual capital and cultivatingthe knowledge gained from these investments bypursuing important strategic options. Companies,such as Chrysler and Toyota, are also capitalizing onthe long-term relationships they have developedwith their suppliers and other companies in pursuingnew technological innovations. Intellectual capital,relationships, trademarks, patents, and reputationalcapital are among the most enduring sources of tech-nological competence in today’s markets.

The resource view further suggests that a competitiveadvantage is achieved by the accumulation, inte-gration, and effective deployment of technologicalresources. Resources serve as a foundation for build-ing enduring, multifaceted capabilities that enablethe firm to develop and pursue effective strategies.When integrated and effectively used, these capabili-ties enable a firm to develop and introduce new pro-ducts, goods, and services efficiently and quickly.These variables can give the firm a key advantageover its rivals, thereby ensuring superior financialperformance.

Some leading companies have effectively used thisperspective in linking their technology and strategicchoices. In particular, these companies have capi-talized on the interconnectedness of technologicaland organizational resources and the potential forsynergy by offering unique applications. These com-panies have also attempted to protect their competi-tive advantages by embodying the technology intoorganizational systems, routines, and cultures thatare difficult for rivals to imitate. These systems arecrucial to the development of effective capabilitiesthat undergird a company’s competitive strategy.

Despite the success companies have achieved using


the resource perspective, this approach has someshortcomings. Specifically, it ignores the dynamicinteraction between a company’s technology andcompetitive strategy variables. Consequently, it failsto inform executives of ‘how’ and ‘when’ technologi-cal factors may change a company’s competitivestrategy and vice versa. What constitutes a ‘tech-nology strategy’ within this perspective is alsounclear. Discussions of this strategy are frequentlylimited to general admonitions to accumulate techno-logical resources and use them in designing a com-petitive strategy. While these general prescriptionsare sensible, their practical value in mapping andshaping competitive strategies is unclear. Thisbecomes evident as industries undergo significantchanges and companies find themselves strugglingwith resources and capabilities that are no longerstrategically relevant. Finally, while this view impliesthat technology (along with other factors) determinesa firm’s competitive strategy, executives are some-times blinded to the limits of the technology as abasis for competition. Over-emphasis on technologi-cal resources can be as dangerous as ignoring thesefactors in designing the firm’s competitive strategy.

Toward a Dynamic View

The hierarchical and resource perspectives areincreasingly inadequate in today’s business environ-ment because they ignore the dynamic links that existbetween a company’s technology and its strategy.They also ignore the learning that occurs as the firmimplements its technology and competitive stra-tegies. This section, therefore, presents a ‘dyadic’ per-spective, one that better matches today’s complexand dynamic environments. This dyadic perspectiveallows the firm to capitalize on the dynamic interplaybetween a firm’s technological capabilities and stra-tegic initiatives.

Technology management specialists from Arthur D.Little have suggested that, while technology must beguided by strategy, it also simultaneously createsconditions to which strategy must respond (Ericksonet al., 1990). They liken the process to an ongoing ‘dia-logue’ between a firm’s strategy and technology. Still,going further and viewing the link between strategyand technology from a ‘dyadic’ perspective isimportant. A dyad is an ongoing, two-way processby which each entity influences the other. Dyadicprocesses emphasize continuing exchange and mut-ual dependency. Each action elicits a reaction and theexchange, in turn, affects the long-term relationshipbetween the two components (Chiesa and Manzini,1998; Itami and Numagami, 1992). A dyadic relation-ship between technology and strategy is a dynamicand interactive process, as illustrated in Figure 3.

The dyadic relationship between a firm’s technologyand competitive strategy has four distinguishing


Figure 3 A Dynamic Perspective on Technology – Strategy Links

characteristics that determine the company’s com-petitive advantage. First, competitive and technologystrategies influence each other in a continuous loop.For example, a change in strategy elicits a change intechnology which, in turn, compels executives to re-examine their competitive strategy. In some compa-nies, the link between competitive and technologystrategies is persistently strong, while the link backfrom technology to competitive strategy is akin tofeedback with only an incremental effect on strategy.In other companies, technology dominates the con-tent and timing of strategic choices. In both types ofcompanies, however, the isolation of the competitivestrategy from technology strategy is not toleratedbecause success requires that the two variables beused together. In these companies, executives, R&Dengineers and staff, and middle managers interactfrequently and make decisions jointly. This constantdialog is evident, for example, in companies in thetelecommunications, multimedia, and electronicindustries.

In those firms that have opted to focus on the inte-gration of technologies to build new applications (e.g.electronic commerce), the development of technologi-cal capabilities and competitive strategies is fre-quently viewed as an evolutionary process.Advances in technological developments encouragethese companies to explore new strategic initiatives,which in turn redefine their technology strategies.

Nokia’s development of the 6100-series cellularphone is an example of the successful integration oftechnologies and competitive strategies. Nokia’sdesign team was charged with creating a lightweight,energy efficient phone that included new features toattract ‘techies’ in global markets. To accomplish this


task, Nokia sought input from its customers such asAT&T in an effort to determine the most desired fea-tures. Information gathered from customers helpedNokia create a wireless phone that weighs about4.5 oz, is the size and shape of a cigarette packageand includes features such as computer games, analarm clock, and an infrared modem for download-ing e-mail. Nokia engaged in a race against time andcompetitors to design the next generation ofhandheld wireless phones, the design team incorpor-ated many of the developments from the 2100-seriesphone and focused much of their developmentefforts on the new features. By designing the phoneto accommodate additional receivers, the phone iscapable of operating on various frequencies used byanalog and digital formats in the US market and thedigital format in the European and most Asian mar-kets. A test version was sent to AT&T and soonbecame the anchor of their nationwide program(Baker, 1998).

Another example of the successful integration ofcompetitive and technology strategies is Baan NV, asmall Dutch company in the enterprise-resource-planning software market. This software is an exten-sion of materials planning which integrates computerfunctions from planning and procurement to trans-portation and distribution. Recognizing the opport-unity in the competitive environment and aligningthe firm’s technology strategy in software develop-ment, Baan NV has moved to the forefront of itsindustry. Baan’s success stems from the company’sclose interactions with its customers, which allowsthe company to respond five times more quickly thanlarger competitors. Baan’s software package gathersdata in every stage in the firm’s production cyclewhile providing detailed information beyond what


larger competitors deliver. Baan is able to providethis higher level of detailed information through on-site software engineers. The intimate insight of theon-site engineers allows Baan to identify weaknessesas they occur and fully and quickly understand thenature of the required software change. Larger com-petitors, which have the technological capability toprovide similar solutions, require additional time tore-learn the customer’s systems and how the func-tions can be integrated. It is the integration of com-petitive and technology strategies that provides Baanwith its competitive advantage (Williams, 1992).

Second, the dyadic perspective also implies that acompany changes its emphasis on technology andcompetitive variables over time. The interplay of thetwo factors as a source of competitive advantage iscyclical — competitive strategy typically dominatesfor a period, then gradually diminishes until tech-nology strategy nears parity and then (perhaps) grad-ual dominance. The cyclicality of technological andcompetitive strategy dominance occurs at varyingrates in different industries, depending on their stageof evolution and the type of technological and com-petitive forces within and outside a company.

Biotechnology firms provide an excellent example ofthe cyclicality of technology and competitive strategydominance. After nearly two decades of strongemphasis on building strong R and D capabilities(technology strategy dominance), Australian, Euro-pean, Japanese, and North American biotechnologycompanies are now placing higher emphasis on pro-duct commercialization (competitive strategydominance). Small and large biotechnology compa-nies, therefore, have explored multiple strategicoptions including alliances with pharmaceutical com-panies to ensure speedy and successful product com-mercialization. Commercialization provides animportant means of creating value for investors andshareholders, while generating the funds needed toexpand firms’ product lines through R&D.

The still camera industry has also been characterizedby similar cyclicality. After a period of technologicalinnovation that saw the development of the singlelens reflex (SLR) and instant cameras, the industryentered a period of relative technological dormancy.During this period, Kodak comfortably dominatedthe market for unsophisticated snapshot cameras.Concurrently, Japanese companies targeted moreserious photographers with SLRs, whereas the Germ-ans occupied the high end of the market. Polaroid(and, for a while, Kodak) occupied the several instantphotography niches. This ended in the mid-1980s asCanon and other Japanese companies developedsophisticated but easy to use 35 mm cameras withinnovations such as auto-focus, auto-load, and auto-rewind. Since then, the industry has been in a height-ened technological state with rapid innovations con-tinuing on many fronts, such as the extensive use oflogic control microprocessors, new light metering


technologies, fuzzy-logic based image stabilization,and electronic image capture. The renewed domi-nance of technology may continue for some time asUS and Japanese companies apply advanced elec-tronics in positioning themselves in the marketplace.

Shifts in relative emphasis on technology and com-petitive strategy have important implications for theevolution of companies. Specifically, the skill andcompetency bases of the firm should be re-evaluatedand new capabilities and competitive approachesconsidered. This shift of emphasis in strategies is evi-dent in the auto industry. Due to the globalization ofthe auto industry, car makers have re-examined theircompetitive strategies and technological choices. Topursue international markets, European, Japanese,Korean, and US car makers have had to upgradetheir production facilities, adopt new technologies,and use innovative management systems and humanresource strategies. These companies have had toinvest heavily to retrain their employees in new pro-duction systems. These and other companies havecome to recognize that learning and unlearning skillsis of crucial importance to the successful cultivationof the link between technology and competitive strat-egy.

Third, a competitive advantage emerges from theactual enactment — linking development andimplementation — of technology and competitivestrategies. There is little value in developing wellthought-out strategies unless they are successfullyexecuted. Similarly, there is no sense in speaking ofa technology strategy if the company ignores theneeds of the market or attempts to sustain a competi-tive strategy without paying attention to the chang-ing technology. Sustaining a company’s technology-based advantage also requires the accumulation andeffective deployment of core skills and relevantcomplementary assets.

The enactment of technology and competitive stra-tegies highlights the role of organizational learningas a source of new ideas or innovative links betweentechnology and strategy. Learning, which emergesfrom formal and informal sources in the organizationand from contact with the external environment, canenhance a company’s ability to exploit its technologysuccessfully. Learning where, when, and how to bestbundle technological resources to develop new mar-kets or penetrate existing ones is especially crucialfor success in today’s global markets. Learning to usethese resources as a focal point in competing is alsoessential to redefining the technological capabilitiesof the firm (McClenahen, 1998). This learning alsodetermines the company’s capacity to respond to itscompetitors’ technological moves.

For some global companies, effectively linking com-petitive and technology strategies can lead to greatsuccess. Based on the increased importance of Asianmarkets, BASF, Germany’s major chemical company,

Over time, a company can

change its technological

capabilities in ways unrelated

to its initial strategic

mission


has identified the benefits of this linkage and hasmade recent changes in its R&D plans to shift majorresearch areas to India to be used exclusively by theparent organization. BASF will also set up a basicresearch center in India in order to establish a majormanufacturing base for its products. The new sub-sidiary will also take up other activities includingmanufacturing products using high technology andR&D activities for high technology, chemical pro-ducts and processes. The company will also functionas an exporter and export agent, sourcing rawmaterials and intermediates from India. Under thisglobal strategy, BASF will gain direct access to itscustomers. Most importantly, BASF will have thecapability to direct its R&D (i.e. technologyorientation) according to its local market since it hasan R&D center in India. This is a good example ofhow a company can link its strategy and technologyand learn new skills. Other companies, such asMicrosoft, have attempted to do the same and capi-talize on the synergy that results from effectivelylinking technological and competitive choices. Tech-nological advances are revising the strategic choicesof companies such as BASF and Microsoft. Concur-rently, effective strategic moves to shape the competi-tive arena, appropriate timing of entry, and sustainedinvestments in building capa-bilities can ensure the effectiveutilization of the firm’s techno-logical resources.

Samsung’s rise to worldwideprominence in the semiconduc-tor industry offers an interest-ing case of organizational learn-ing through a variety ofprocesses. Starting as an imi-tator, Samsung copied productsmade by US companies. However, recognizing theneed to differentiate its products and reposition itself,the company embarked upon a massive internal R&D program. To compress the new product develop-ment cycle and establish itself as a credible globalplayer, Samsung hired several US-trained, Korean-born scientists with strong connections to the US aca-demic and business communities. The company alsocompleted several licensing agreements that gave itaccess to modern US technological developments. Inaddition, Samsung bought a US-based semiconduc-tor company. Together, these activities expeditedSamsung’s ability to learn complex skills, a resourcethat set the stage for the company to develop innov-ative products that set international standards ofhigh reliability and superior performance. Compa-nies such as Samsung, that seek to establish techno-logical leadership, must work hard at gaining knowl-edge and then cultivating the learning they haveachieved by exploiting their technological develop-ments.

Fourth, both formal and autonomous efforts areessential to ensure the fit between technology and


competitive strategy. Formal (induced) efforts, whichemanate from the firm’s existing competitive strategyand mission, are the core of the hierarchical andresource perspectives, discussed earlier. They alsoprovide a frame of reference from which to startthinking about coordinating the company’s tech-nology and competitive strategy. Yet, formal activi-ties are frequently insufficient to achieve this coordi-nation because they ignore developments that occurserendipitously in a company. Autonomous efforts,initiated by champions of technological or strategicchange, can offset this blind spot by providing theglue that binds technological and strategic choices(Burgelman, 1983, 1991).

As Figure 3 illustrates, a company’s formal competi-tive and technology strategies should influence andreinforce one another. Informal (autonomous) stra-tegic and technological initiatives supplement theformal strategies. Some autonomous technologicalinitiatives are a response to the needs of the com-pany’s formal competitive mandates. Technologicalcapabilities, as noted previously, may also encourageexecutives to initiate new strategic moves. This inter-play between technology and competitive strategy isfurther affected by the results of autonomous stra-

tegic and technological pros-pecting. Technological pros-pecting can also widen thearray of options available to thecompany, which promptsadditional strategic changes.Strategic re-orientation, in turn,can encourage future techno-logical prospecting. Theseactivities and their influence onthe dyadic links between acompany’s technology and

competitive strategy are discussed next.

Technological and Competitive Prospecting

One implication of the existence of the formal andinformal (autonomous) behaviors described above isthat, over time, a company can change its technologi-cal capabilities in ways unrelated to its initial stra-tegic mission. Having developed or acquired a tech-nological capability, the company may explore waysto incorporate the new technology into its strategicarsenal. For example, Reynolds has long been ident-ified as a successful aluminum products company.As Reynolds broadened its product-market scopeand technological capabilities, it evolved from a min-ing and smelting company to a value-added providerof aluminum for a variety of specialized applications,such as aircraft wings and automobile engines. As aresult of Reynolds’ ability to change its technologicalabilities, the company developed a consumer pro-duct, aluminum foil, which proved to be very suc-cessful. This innovation positioned the company toexpand into the plastic wrap business, which led to


new technological capabilities in developing plasticsheeting. Reynolds is now innovating by developinga plastic wrap with superior properties. It can alsoexpand into other wrapping products or other plasticfilm applications, all of which have taken the com-pany far afield from its original aluminum business(in which it continues to thrive).

The dyadic perspective also recognizes the impor-tance of what we term ‘technology and competitiveprospecting’ — defined as those activities that arefree of constraints imposed by a company’s prevail-ing strategic position (Burgelman and Sayles, 1986).Technological prospecting centers on finding newsolutions to organizational problems or upgradingexisting technological capabilities. Prospecting activi-ties are not random, but, instead, are related to thenotion of a ‘growth vector’, which anticipates thetypes, direction, and intensity of a company’s growthplans (Ansoff, 1965). These experimental activitiesfrequently widen a company’s growth vector in waysother than those envisioned in the formal strategicplan. They are analogous to ‘autonomous strategicbehaviors’, those activities that fall beyond a com-pany’s formal exploration of new technologies and,later, incorporating them into its technology port-folio.4 Prospecting is enhanced and sustained by theavailability of slack resources, and by an organiza-tional culture that fosters innovation and encouragesthe integration of emerging and established techno-logies.

Mazda provides an example of technological pros-pecting and how a company can benefit from it.Mazda sanctions several projects each year under the‘off-line 55’ program (the ‘55’ indicates that Mazdaexpects just over half its projects will result in suc-cessful market commercialization, a high hit-ratio byindustry standards). This program includes initiat-ives that bridge its ‘on-line’ projects (which are typi-cally incremental updates of existing models) and itshighly experimental ‘concept car’ and basic researchprojects (which are long-term in nature). ‘Off-line 55’projects, if successful, will result in new products andtechnologies and innovative manufacturing pro-cesses that Mazda can then apply to other areas orprojects. One such project resulted in the highly suc-cessful Mazda Miata. Other changes that resultedfrom the ‘off-line 55’ project which produced theMiata, affected the way Mazda’s other operationsand new ventures are developed and managed. Com-panies such as 3M, Dow Chemical, Kodak, Hewlett-Packard, and Motorola have similarly encouragedand exploited technological prospecting in generat-ing promising ideas that are later embodied and inte-grated into their formal R&D activities.

According to the dyadic perspective, competitive andtechnology prospecting simultaneously affect eachother in real time (i.e. in the same time period).Besides this direct effect, there is a reaction effect.Both forms of prospecting concurrently influence the


‘opposite corner’ first, as shown in Figure 3. A viablenew competitive angle has almost immediate impli-cations for redefining the company’s technologystrategy to build and solidify its competitive position.When this proves to be a technologically viableextension, the new angle is incorporated into thecompany’s competitive strategy. Similarly, a techno-logical development has to be immediately examinedfor its future competitive value. If the new tech-nology is found to be market-worthy, then the com-pany can modify its technology strategy to includethis new component, exploring any new avenuespresented by the technological development.

Technology and competitive strategies need not bealways synchronous with each other. In fact, thedyadic view suggests that they are often asynchro-nous, where one or the other leads at any one time.The history of Apple, Compaq, General Motors (GM),and Texas Instruments highlights this temporaldominance of the competitive strategy and tech-nology variables. For years, these companies haverecognized the dominance of either technological orcompetitive strategy factors in determining the out-come of their innovation. Consequently, at any pointin time, some successful companies are technology-driven (such as Motorola, 3M, and Merck) or strat-egy-led (such as Black & Decker). The success of acompany depends, instead, on understanding andexploiting the ongoing interplay between their tech-nology and strategy. Successful companies use differ-ent approaches to stimulate and cultivate thedynamic interplay between technology and strategy.Some firms employ their technology as a foundationfor targeting and entering new markets, while othersemphasize the rapid deployment of new technologyfor repositioning their products. Companies alsospeed up the technology development process by ‘re-engineering’ it, directing it towards specific appli-cations, ensuring that it remains in continuous con-tact with other departments, and transferringresearchers to the factory floor along with their tech-nology.

Motorola is an example of the way a company caneffectively use the dynamic relationships between itstechnology and strategy and the possible problems.Motorola innovates by creating more powerfulmicroprocessors and more compact cellular phonesand paging devices than the competition. It has alsopioneered other new wireless communication tech-nologies. Motorola’s competitive strategy has beenlargely predicated on what it can achieve in its lab-oratories. Harmonizing the relationship betweentechnology and competitive strategy is achievedthrough Motorola’s periodic redirection of the com-pany’s technological efforts. However, the inter-change between technology and competitive stra-tegies may lead the company in a direction awayfrom its traditional strengths based on the dominanceof one of the strategies. For instance, Motorola’s lateentry into digital handsets (a strategic mistake)


caused the company to give up considerable marketshare in the wireless communications market. Motor-ola should have allowed its technologists to take thelead, rather than forcing them to take a back seat tobusiness strategists who failed to appreciate the sig-nificance of the shift to digital technology.

Clearly, like other companies, Motorola’s technologi-cal and competitive strategies require careful align-ment — a challenging task because of the dynamismof these variables. This task is further complicated bythe fact that technology and competitive strategytend to dominate one another at different times.Sometimes, the dominance of either technology orcompetitive strategy lasts for several years, interrup-ted by radical technological advances or a significantstrategic re-orientation. There are also significant dif-ferences in the lag between technology and competi-tive strategy factors. These lags reflect the physicaland organizational separation between the R&D andline divisions, the ‘technology-mindedness’ of thecompany’s senior executives, the intensity of compe-tition in the industry, and the industry’s growth rate.To understand these variations, the process of cre-ating and managing these dynamic processes in anindustry is examined next.

Exploiting the Technology–StrategyDynamic Links

To gain an advantage from its technological and stra-tegic choices, a company needs to make effective useof the dyadic relationships between these variables.Success depends on simultaneously managing thecompany’s internal forces and its external environ-ment. The external forces are usually reflected in twocrucial factors: (1) the underlying rate at which tech-nology advances in the company’s relevantproduct/markets with the predictability of thesechanges, and (2) the amount of heterogeneity in thetechnological prowess of successful companies in theindustry. The internal forces are typically reflected ina company’s ability to develop and deploy innov-ative technologies. The combination of these threeforces produce eight possible situations based onhigh and low levels of each of these factors, as shownin Figure 4.5

The rate of industry technology change, depictedalong the horizontal axis of Figure 4, reflects the tech-nological dynamism and vitality of the industry. Thisis usually indicated by the high number of patentsissued per year, level and amount of spending onprocess and product R&D, and the average age ofexisting products and technologies in an industry. Ingeneral, the greater the rate of technological changein an industry, the greater the likelihood that tech-nology will dominate a company’s competitive strat-egy. Market dynamism creates opportunities for tech-


nological innovation but also challenges the companyto protect, upgrade or even revise its technologicalcapabilities. Today, companies in industries asdiverse as the biotechnology, telecommunication,multimedia, and cable TV are facing this challenge.

The second factor, represented in Figure 4 by the twolevels of shading, refers to the degree of heterogen-eity of the technological capabilities among industryplayers. High heterogeneity indicates the existence ofa wide range of technological capabilities and optionsthat are feasible for players in the industry. Hetero-geneity typically results from differences in compa-nies’ resources and capabilities and from historicalfactors (e.g. timing and order of market entry).Because companies vary in their technological skills,opportunities exist for internal development, as wellas the acquisition, of these capabilities externally.Companies can exploit differences in technologicalresources by pursuing different competitive stra-tegies.

The third factor, as drawn on the vertical axis of Fig-ure 4, is the company’s ability to generate and com-mercialize new technologies. Development anddeployment of technologies usually require differentskills and yield different types of competitive advan-tages for a company. The greater the company’sability to develop and commercialize a technology,the stronger its competitive position. A company,therefore, needs to invest heavily in assembling andbundling tangible and intangible resources that cre-ate a competitive advantage from commercializing itstechnologies. The amount and nature of these invest-ments depend on the desired timing of the release ofnew products (technologies), which can profoundlyimpact a firm’s competitive advantage. For example,by being the first to the market with a technology, acompany can determine and alter the nature of itscompetitive landscape and rules of competitive rivalry.

The eight cells in Figure 4 show different settings inwhich companies must select particular strategies.Each cell offers several strategic choices from whicha company can dynamically link its technology withstrategy. Consequently, companies can use differentcompetitive strategies to succeed in each cell byemphasizing particular combinations of technologi-cal factors.

Cell 1. Companies in this cell usually compete in aquintessentially low technology environment.Although such industries are increasingly rare, thosecompanies that find themselves in this situationwould do well to engage in some technological pros-pecting to safeguard against upheavals caused bytechnological progress. For instance, the athletic shoeindustry could have been characterized as a ‘lowtech’ industry several years ago. However, throughcareful prospecting, it has been transformed throughincremental innovations into an increasingly high


Figure 4 Firm and Industrial Technological Characteristics

technological change, high heterogeneity industry(cells 4 and 8 in Figure 4).

Successful players in Cell 1 usually follow a carefullydesigned competitive strategy that exploits existingtechnologies, while emphasizing incremental inno-vations. Through continuous innovations, these com-panies introduce changes in their competitiveapproach while revising the boundaries of theirindustries. These changes, in turn, reshape the rulesof competitive rivalry and the composition of thecompetition. To alter the dynamics of market power,moreover, these companies frequently apply techno-logical innovations acquired from other industries.Navistar, for example, has followed this strategy toreposition itself in the truck building industry,exploiting advances in artificial intelligence in itsdesigning and manufacturing of new products.Through a series of innovations in its technologicaland competitive approaches, Navistar has become asuccessful company that has been hailed for itsresponsiveness to market and customer conditions.


Cell 2. This cell differs from Cell 1 in the presenceof one or more technology-driven competitors in anotherwise technologically dormant environment. InCell 2, therefore, a company should react to potentialtechnological dynamism by making rapid andjudicious investments to open one or more techno-logical fronts.

The washing machine industry (a mature industry)provides an excellent example of a technologicallydormant environment where the majority of competi-tors have not dramatically increased the technologyin their products. However, Maytag has focused onbalancing the demand for both energy savings andwashing quality, through new technologies. Tra-ditionally, US consumers have preferred top loadingor vertical-axis washing machines, which use moreenergy and water. This washing machine can finishthe wash quickly and is convenient to operate. Incomparison, the existing front-loading washingmachines were thought to be time-consuming. Con-sidering this factor, manufacturers of washing


machines in the US had not introduced front-loadingwashers to consumers. Because of the current intensecompetition in such a mature market, however, May-tag has developed a new way of combining the bestfeatures of the two washers. Maytag cooperated withElectric Power Research Institute (EPRI) to design anew model of washing machine embodying cost- andtime-saving features. With some crucial changes indesign, Maytag has marketed a competitive washer,Neptune, which uses 38 per cent less water and 56per cent less energy while offering better washingquality than traditional washing machines. Eventhough the Neptune is more expensive, Maytag hasincreased its sales and production. This is expectedto spur further innovations in the washing machineindustry.

The tennis racket market offers another interestingexample. The industry began to change when somecompanies started using high-tech materials. Soon,several companies were engaged in developing newtechnological fronts, such as reshaping and resizingrackets to enhance their ‘sweet spots’. Companiesproducing traditional wooden rackets were forced toinnovate. Still, companies must be careful not to getahead of the market curve; this is a slow moving mar-ket and some customers may be unresponsive to atechnology-centered message.

Cell 3. As Figure 4 shows, this environment combinesa high rate of technological change in an industry,low technological heterogeneity among key players,and weak company technological capabilities. Giventhe high rate of technological change in the industry,successful companies are technologically proficient inwhat is likely to be a cutting-edge industry (e.g.biotechnology and computer software). Conse-quently, low technology niches in such an industryare rare. Unless a company can identify sizable mar-ket segments actively averse to the prevailing tech-nology levels in the industry, it risks failure. Instead,a company can use internal technological develop-ments or externally developed technologies tobroaden its technological base and create differen-tiated products that distinguish it from the compe-tition. Biotechnology and chemical firms, especiallythose that specialize in industrial applications, haveused this strategy with great success.

Cell 4. This cell describes a maturing industry inwhich there is room for competitors of widely dif-fering technological competencies. To survive in thissetting, low technology competitors must have acompelling message to deliver to a substantial,responsive segment of the market. One reason is thatlow technology segments of this market are probablymore competitive than at the high end because sev-eral competitors can simultaneously target a smallsegment employing similar strategies. For instance,in the VCR market, companies currently stress user-friendliness and ease of programming rather thantechnological breakthroughs, a factor that makes this


market extremely competitive. Overall, companieswith strong technological capabilities can compete inthis environment by emphasizing radical productintroductions. Other companies can strengthen theirpositions by achieving significant low cost advan-tages.

One company that has made effective use of tech-nology in this setting is Wal-Mart. Using advancedand innovative information technology throughoutits US operations, the company has been able to achi-eve efficiency while building a strong competitivelead by offering better service and quality. Theseachievements have positioned Wal-Mart as the leaderin the discount retailer industry. Next, exporting itstechnological skills and experiences gained in the USto overseas’ markets, Wal-Mart has built an efficientworldwide distribution network. The use of infor-mation and other technologies has also enabled Wal-Mart to change the rules of competition in theretailing industry outside the US, while allowing thecompany to acquire market share and build a stronginternational presence (Zellner, 1997). Clearly, Wal-Mart has used its technology to revise the competi-tive rules in the global retailing industry.

Cell 5. This cell is nearly a mirror image of Cell 2,with a major difference: a company can introduce sig-nificant technological innovation into an industrythat exhibits little technological change. That is, thegap between a company’s technological capabilitiesand the low rate of industry technological changecreates some opportunities to broaden a company’smarket scope or further penetrate existing niches. Ineither case, this is a high risk strategy but one thathas a potentially dramatic financial payoff, especiallyif the company holds a large market share. A com-pany, therefore, must aggressively protect its tech-nology from ‘me-too’ competitors, and encouragetechnological prospecting along other viable dimen-sions. The company should also regulate the pace oftechnology introductions to its market and packageits technology in a way that minimizes customerresistance.

The industrial gas supply business, which is a rela-tively low technology industry, is a good example ofcompetition in this industry setting. Paris-based AirLiquide, in particular, has succeeded in this industryby making effective use of innovative technology.The company identified the need to provide infor-mation, customer service and technical support to itscustomers in addition to the gases necessary for theirapplications. In addressing these concerns, AirLiquide began to produce gas on the customers’ siteusing a nitrogen-production service labeled Floxal.This new system provides their customers with infor-mation regarding the pressure, purity and flow rate,in addition to emergency back-up needs. Theseadditional systems also allow Air Liquide to monitorthose on-site units via a telephone line to avoid haz-ards and emergency stock out positions before they


become a problem for the customer. These inno-vations have proven to be very beneficial to AirLiquide which can boast about having over onemillion customers, including serving IBM inCorbeil, France.

Cell 6. As a natural progression from Cell 5, a com-pany may face additional technology-centered com-petitors (‘me-too’s’) in this low technology market.For instance, Yamaha, a pioneer in digital pianos,now faces competition from several leading elec-tronic companies that are increasingly active in theindustry. A company in Yamaha’s situation, there-fore, can intensify its technological efforts to positionitself as a leader when the industry becomes techno-logically vibrant. In this environment, sustainedsuperior performance requires continuous inno-vation, dedication to setting the market’s financialand technological standards, and building and sus-taining mobility barriers that reduce the influx of imi-tators and free riders (Liberman and Montgomery,1988). The ultimate strategic move in Cell 6 is toemploy technological resources to reposition thecompany in a new segment, abandoning areas where‘me-too’ companies crowd the market.

The market for audiotapes is representative of thissegment. The basic technology to manufacture audi-otapes is relatively easy to duplicate. Under theseconditions, TDK, a well-known Japanese manufac-turer of audiotapes, has employed an effective strat-egy that uses its technological resources to ensureproduct differentiation. TDK has also introduced tothe market a series of new products characterized byhigh resolution, low noise, and long performance.TDK has come to recognize that even though com-pact discs (CDs) presently dominate the audio mar-ket, there is still a vast market for audiotapes,especially a market for audiotapes that can reproduceCDs to high-quality tapes. For instance, TDK nowmarkets metal-position, high-bias, CD-ing tapes. Inthe CD-ing tapes, TDK also uses advanced bindersystems, and TDK’s high-precision P-RC HRT mech-anism to ensure superior rigidity and low resonance.All these products are also available at 70–110 minlength of playing time that is another hard-to-dupli-cate feature of TDK’s tapes.

Cell 7. Conceptually speaking, in this cell, nearlyevery successful company is technologically capable.While variations might exist among firms in theirtechnological capabilities, most industry participantspossess considerable technological skills. This meansthat companies should not rely on technology as theirprimary solution to competitive concerns. Althoughtechnological skills are still important determinantsof a competitive advantage, competition solely basedon technology is extremely difficult while attemptingto sustain advantages in this environment. A com-pany should pursue a competitive strategy focusingon both technological and non-technological factors.

Daimler-Benz, maker of Mercedes-Benz automobiles,


offers an example of the effective integration of tech-nology and competitive strategies. The company hasrecently adopted a competitive strategy that comp-lements its strong technological advancements. Merc-edes dealerships will begin stocking a line of moun-tain bicycles. In fact, many of the new sport utilityvehicles will be on display with mountain bikesmounted in the roof racks. The bikes are seen almostas an accessory and will match other Mercedes pro-ducts in terms of their relative cost. This move byMercedes is an attempt to draw the younger con-sumer into the showroom and offer more than theircompetitors for the sporting enthusiast. The market-ing effort by Mercedes signals an attempt to use itscompetitive strategies in combination with its techno-logically advanced products to create a competitiveadvantage that distinguishes itself from competitors(Sansoni, 1998).

Cell 8. Strategic options in this setting are usually lim-ited and, consequently, those companies lacking theability to innovate at high levels will be relegated to‘follower’ positions. These companies frequentlyundertake marginal improvements to technologiesintroduced by market leaders. Instead, they wouldbe better advised to focus on delivering value andservice. For example, in its early years, Dell Com-puters was successful at marketing low priced IBM-clones via mail orders. In the late 1980s, Dell changedits strategy to emphasize innovation; it hired a largeR&D staff and spent $30 million on research. How-ever, Dell failed to generate significant technologicalinnovations. In 1990, the company abandoned thatstrategy, reverting to marketing technologically‘mature’, low-priced computers that offer attractiveprice–performance ratios and customer support com-pared to premium brands. Using a product differen-tiation strategy, Dell competed as a follower by mak-ing mature technologies available to a larger marketby repackaging them and pricing them aggressively.

Managing the Technology–StrategyRelationship for Market Success

The above discussion highlights the importance ofunderstanding and exploiting the dynamic interplaybetween a company’s technology resources and itscompetitive strategy. It shows that this dynamicrelationship can form the core of a company’s strat-egy and the basis of its competitive advantage. Thediscussion also underscores three additional lessonsfor the effective management of technology in rap-idly changing markets.

First, the dynamic (dyadic) perspective of technologymanagement recognizes the importance of formaltechnological initiatives as well as prospecting. Bothactivities are essential for success and must be con-sidered in managing the company’s strategy–tech-nology relationship. For example, Sony is a company


that excels in managing the technology–strategydyad. It has a large, formal R&D unit that is highlyfocused on developing applications for its varioustechnologies. These projects are selected based on acareful, formal evaluation of the company’s strategicposition and objectives. When R&D efforts yield‘unexpected’ outcomes, Sony quickly determineswhether they should be incorporated into its currentbusiness or whether a new line should be created.Frequently, Sony would discontinue projects when itidentifies no long-term prospects for exploiting thetechnology. Akio Morita summarized Sony’s philo-sophy as follows:

R&D expenditures decrease our profits, and if it is not feas-ible as a business proposition there is no justification tocontinue. Knowing when to stop is the key to success... Weare not a research institute, after all, and so when wedecide to go ahead with R&D the executives should knowat the beginning what the goal is. (Morita, 1986)

Sony’s experience highlights the need for activemanagerial involvement and vigilance to ensure aneffective dialog between a company’s technology andstrategy. This also requires re-examining the com-pany’s formal strategy. Companies must, therefore,encourage prospecting but retain a strong sense offocus. A vision of better serving the customer canalso help executives separate promising ideas fromless promising ones. With this as an overriding objec-tive, executives can choose whether to develop thetechnology internally or explore alternative arrange-ments such as technological outsourcing, selling orlicensing their technology, and the formation of tech-nology-based strategic alliances (Arthur, 1996).Executives must also consider the financial conse-quences of the new technology, its fit with the firm’smarket base, its potential impact on the firm’s knowl-edge base, and the anticipated direction of the indus-try’s technological evolution.

Second, learning is important in managing a com-pany’s technological and competitive strategy initiat-ives. Learning is defined as ‘the ways firms build andsupplement their knowledge bases about techno-logies, products and processes, and develop andimprove the use of the broad skills of theirworkforces’(Dodgson, 1991). Formal and prospectingactivities usually entail considerable learning.Indeed, a dynamic view of the strategy – technologyrelationship would be incomplete if it does not recog-nize the role of organizational learning. Learningaccumulates from a firm’s experience in solvingparticular problems, such as changing a strategy totake advantage of new technologies. It also emergesfrom observing, studying and evaluating competitorsand markets, and from the company’s contacts withexternal research groups and other organizations.Much can also be learned by communicating withcustomers to know their needs and, in turn,attempting to articulate the implications of cus-tomers’ changing needs for the firm’s strategic andtechnological initiatives. Executives can also gain


insights from examining customer and market reac-tions to the introduction of the firm’s new products.Still, another source of learning is the interactionamong units within the company, as occurs when R&D, manufacturing and marketing units exchangeideas and collaborate on new product development.

Managing the strategy–technology dyad requiresattention to, and use of, these diverse organizationalsources. It also demands a formal commitment bysenior executives for learning and cultivating theknowledge resulting from these efforts. This, in turn,helps to enhance the technological and organizationalskills of senior executives (Clarke, 1998; Bohn, 1994).These skills can be invaluable in mapping future stra-tegic choices, aligning a company’s strategic initiat-ives, and creating an enduring competitive advan-tage.

Third, special attention should be given to linkingtechnological and organizational evolution. Techno-logical choices should be guided by a clear vision ofthe firm’s mission and strategy. Organizational evol-ution, and indeed the concept of the firm itself, needto reflect a company’s technological skills andresources. The dyadic perspective presented in thisarticle highlights the importance of linking organiza-tional and technological evolution (Inkpen, 1998;Howells, 1995; Swan, 1995; Tzokas and Saren, 1997).As the firm’s technological base and skills widen, itsdefinition of the market and competition are likelyto change. This ongoing interplay between the firm’sbusiness concept and its technological capabilitiescan widen the strategic options available to the com-pany.

Harvesting a firm’s technological resources and capa-bilities to create a competitive advantage is one of thekey challenges facing executives today. Respondingto this challenge requires fresh thinking and exper-imentation with new perspectives. This article hasdescribed a dynamic perspective on the effective linkbetween a firm’s technology and its competitive strat-egy. This perspective is offered as a way of stimulat-ing the development of new strategic initiatives thatfoster and cultivate the ongoing relationship betweena firm’s technological resources and competitivestrategy.

Notes

1. For a discussion of these views see Sampler (1998); Mitch-ell (1990) and Zahra and Covin (1993).

2. These views are best illustrated in Bowonder (1998) andGroenveld (1997).

3. These views are well represented in the writings of Nel-son and Winter (1982). Company case examples can befound in the following articles: McGaughy (1989); Ken-nedy (1989); Kuwahara et al. (1989).

4. The three dimensions in Figure 3 are distilled from theliterature, especially Ford (1988); Miller (1988); Van Guns-teren (1987); Whipp et al. (1989); Langowitz (1992) andWilliams (1983).

5. For an alternative view see Clark (1989).


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SHAKER A. ZAHRA, RAJENDRA S. SISODIA,Department of Manage- Department of Marketing,ment, J. Mack Robinson Col- Bentley College, 175 Forestlege of Business Adminis- Street, Waltham, MAtration, Georgia State 02154, USA.University, Atlanta, GA30303, USA. Dr Rajendra Sisodia is

Trustee Professor of Market-Dr Shaker Zahra is Pro- ing at Bentley College infessor of Strategic Manage- Waltham, Massachusetts.ment in the J. Mack Robin- His research centers on tech-son College of Business at nology management and the

Georgia State University in Atlanta, Georgia. His role of information technology and digital commerce onresearch centers on entrepreneurship, innovation, and marketing strategy and productivity. Widely publishedtechnology management. He is the author or editor of in academic and professional journals, he has workedfive books and numerous articles in academic journals in national media, recently co-hosting a monthly talkand serves on the editorial boards of several journals. show on business and management issues broadcast on

US National Public Radio.

BRETT P. MATHERNE,Department of Manage-ment, J. Mack Robinson Col-lege of Business Adminis-tration, Georgia StateUniversity, Atlanta, GA30303, USA.

Brett Matherne is currentlya doctoral student in stra-tegic management in the J.Mack Robinson College of

Business at Georgia State University. His research isfocused on the intersection of technology and inter-nationalization strategies for entrepreneurial firms andthe role of knowledge-based resources in firm perform-ance.


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Exploiting the dynamic links between competitive and technology strategies