Technology Lockout - Review of Research Papers

TECHNOLOGICAL LOCKOUT: AN INTEGRATIVE MODEL OF THE ECONOMIC AND STRATEGIC FACTORS DRIVING TECHNOLOGY SUCCESS AND FAILURE. By: Schilling, Melissa A., Academy of Management Review, 03637425, Apr98, Vol. 23, Issue 2

Technology lockout occurs in industries where a dominant technology emerges or a standard emerges within the industry or through government regulation. The paper develops the theory of this phenomenon. Specifically, it identifies attributes of the firm that are of help in  preventing technology lockout.


Proposition 1: Failure to invest in continuous learning processes will increase the likelihood of technological lockout.
Very often, however, technologies that appear to meet or exceed consumer expectations are rejected by the market. This phenomenon is particularly likely in markets characterized by network externalities. The industrial organization economics research on network externalities indicates that technology adoption decisions often are driven by the size of the technology's installed base or its availability of complementary goods, rather than its technological superiority or inferiority. I consider these two factors and their self-reinforcing effects next.

Proposition 2a: In industries characterized by network externalities, an insufficient installed base will increase the likelihood of technological lockout.

Proposition 2b: Timing may have a mediated effect on the likelihood of technological lockout by influencing the size of the installed base. Later entry increases the likelihood of having an insufficient installed base, which increases the likelihood of technological lockout.

Proposition 3a: For technologies requiring complementary goods, a lack of complementary goods will increase the likelihood of technological lockout.
Proposition 3b: The strength of the relationship between lack of complementary goods and technological lockout will be increased by the presence of network externalities.

Proposition 4a: Timing of entry will have a U-shaped relationship with the likelihood of lockout: entering very early or very late will increase the likelihood of technological lockout.


Proposition 4b: The strength of the relationship between late entry and technological lockout will be increased by network externalities and low entry barriers.
Proposition 4c: The strength of the relationship between very early entry and technological lockout will be weakened by the degree of improvement the technology offers over previous technologies.

Proposition 5: Under conditions of an existing dominant design, the likelihood of technological lockout is positively related to the existence and degree of effectiveness of competitor patents protecting the dominant design.

Proposition 6: Under conditions of an existing dominant design, failure to invest in continuous learning will increase the likelihood of technological lockout.