An Empirical Exploration of a Technology Race

RAND JOURNAL OF ECONOMICS, Vol. 28, No. 2, Summer 1997

Posted: 9 Jul 1997

See all articles by Josh Lerner

Josh Lerner

Harvard Business School - Finance Unit; Harvard University - Entrepreneurial Management Unit; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI); Harvard University - Private Capital Research Institute

Abstract

An extensive theoretical literature examines technological competition and, in particular, whether leaders maintain their standing. These models, however, have received little empirical support. I examine innovation in the disk drive industry, an environment particularly conducive to identifying racing behavior. Strategic variables prove significant in explaining the decision to innovate. The patterns are in accord with Reinganum's work: firms that trail the leader innovate more. I add controls for technological opportunity, financing constraints, and firm turnover. When firms manufacture drives for internal use or there are many entrants, and strategic interactions may be less important, the effects are less pronounced.

JEL Classification: L21, L22, O31, L63

Suggested Citation

Lerner, Josh, An Empirical Exploration of a Technology Race. RAND JOURNAL OF ECONOMICS, Vol. 28, No. 2, Summer 1997, Available at SSRN: https://ssrn.com/abstract=8724

Josh Lerner (Contact Author)

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Harvard University - Entrepreneurial Management Unit

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