Path creation meets path continuation in a complex technological system : Sonera’s quest for telecom industry’s dominant design, 1980-2010

Abstract: There has been paucity of research in how industrial evolution and path dependence happen in a complex technological system. Historical analyses of technologies such as those related to automobiles provide evidence that once a dominant design is settled, there are increasing returns to industry- and market-wide adoption. Innovation and the creation of a (potential) path alone do not suffice. Against this background, this paper reports on findings from our analysis of a historical and embedded case study of the telecom industry and Sonera (a.k.a. Telecom Finland), 1980 to 2010. The paper concludes with four propositions, two of them strengthening earlier research and two other ones offering novel directions. These are: (1) also in a complex technological system, upon or directly after the occurrence of a discontinuity or discontinuities, complementary assets appear to provide limited competitive advantage for any company; (2) once a dominant design is in place, it homogenizes consumer and other customer preferences also in a complex technological system; (3) the homogenization increases possibilities for “hybridization”; that is, that co-existing and meeting of two or more earlier independent paths continue; and (4) at this “intersection”, there is, at least for a short moment, simultaneous path continuation and path creation. 

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