Competition under continuous technological change

This paper examines competition patterns and competitive strategies when technology changes continually. It first discusses optimal behavior for investment in technology. It is argued that although technological innovations supersede existing technologies, there are economically justifiable barriers to investing in the new technologies. These economic barriers, coupled with continuous technological change, have implications for certain aspects of strategy, such as entry by means of new technologies, timing of entry, leapfrog‐type competition, vertical integration, the productivity dilemma, and escalating commitment. Finally, the industrial transformation of the steel industry is used as an example to illustrate these implications.