Beating the crowd: The interplay of firm experience and industry dynamics in radical innovation

The technology transition driven by artificial intelligence is causing new patterns of technological change. Some firms design their entire products or business models around AI, while others employ it moderately or not at all. We therefore explore the firm- and industry-level antecedents of AI entry. We hypothesize that new ventures are more likely to engage in artificial intelligence in synchrony with industry competitors. Yet, at the firm-level, broad pre-entry experience leads to differentiated opportunity recognition, which enables distinctive market entry. We find support in data on 1258 new ventures in 47 industries. In industries with low AI entry, ventures with broad pre-entry experience have a higher degree of AI entry. Conversely, in industries with high AI entry, ventures with broad pre-entry experience have a lower degree of AI entry. Hence, we contribute to theory on technology transitions with a firm-level view of industry life cycles, and to entrepreneurship theory with insights on the industry-level conditions influencing pre-entry experience.