An investment research on radical innovation and complementary assets

The frequency of radical technological innovation is increasing. When incumbent firms experience technological disadvantage during the period of technological change, the extent to which that disadvantage translates into a commercial disadvantage may depend on the breadth of radical technologypsilas disruption. If new technology only destruct incumbent firmspsila technical capabilities but not the value of complementary assets, then incumbentspsila performance will improve; however, if new technology simultaneously disrupt incumbentspsila technical capabilities and the value of complementary assets, the incumbentspsila performance will decline. The expectation on the emergence of radical technological innovation determines the path of incumbentspsila technological changes, and affects the incumbentspsila investment on complementary assets. Through a simple investment modal, this paper explore incumbentspsila investment strategy of complementary assets when faced with radical technological innovation, and a corresponding example is given.