The dynamics of continuous innovation in scale‐intensive industries

Abstract This paper attempts to explain why some industries succeed in dematuring by formulating the generation and utilization of new technologies into a continuous process. By reference to the performance of Japanese scale‐intensive industries (i.e. automobile and consumer electronics durables), the analysis provides a theoretical foundation for the proposition that a certain type of positive‐sum game played among a variety of market entrants generates specific ‘inter‐group dynamics' (hyper‐learning process). In this industrial climate the firms’ inclinations towards offensive management and product‐cum‐process innovation has resulted in the coupling of continuous innovation and industrial evolution.