Keeping Options Alive: Evidence from the Flat Panel Industry (CEIBS Working Paper, No. 023/2020/STR, 2020)

This study explores how dual investment strategy become effective during technology replacement. To the early entrants of a nascent industry, a dual investment strategy might not be effective. To the late entrants competing at the level of ecosystems, however, dual investments becomes effective. The effect becomes more salient when the firms feature a business group structure and focus on emerging markets as they facilitate managing compounded complexity borne out of maintaining dual options. We find supporting evidence for our theoretical predictions through empirical analyses using 330,774 patents filed in the global flat panel display industry from 1970 to 2010.