Figure 8.1 outlines schematically the technology strategies and environmental constraints associated with the sources of a firm’s technical knowledge, as prevailed in much of the relevant literature in the late 1970s and throughout the 1980s. Hence, this conceptual model is a useful starting point, although we will criticize this model, and thus the mindset of many of the researchers at the time, later in this chapter. In the model in Figure 8.1, firms are shown to operate in a market environment, which influences their innovative activities. Markets are traditionally characterized in economics on a continuum ranging from monopoly to pure competition. Although this continuum is useful for discussions about price competition or competitive strategy, it loses some applicability when technological competition is considered.
A firm’s technological environment can be characterized along several dimensions. The overall market structure in which the firm operates influences its innovation strategy, and that strategy in turn influences the methods used for acquiring, developing, and modifying technology. For example, in mature markets, where
Figure 8.1 Early conceptual model of sources of technical knowledge.