Research

Sudden technological changes are prevalent in nascent industries, and prior experience in the relevant technology is often associated with superior adaptation; yet we know surprisingly little about the nature of this advantage. What kind of innovation advantage does prior experience create, and where does that advantage reside? I examine these questions in the autonomous vehicle (AV) industry following the 2018 Uber and Tesla fatalities, which elevated radar from a peripheral sensing technology to a central component of AV development. Given evidence that the failures triggered investment and knowledge development around radar across the industry, I find that radar patents filed after the failures by firms with pre-failure radar experience receive twice as many citations from outside the AV industry as those filed by firms without such experience, with no corresponding difference in citations from within the industry. This advantage emerged through the presence rather than the level of prior engagement, suggesting that what mattered was not accumulating radar expertise but having a prior basis for recognizing and acting on the technology once the failure elevated it. Further analyses show that this advantage resides at the firm level rather than in individual radar specialists or accumulated radar knowledge. Together, this paper provides evidence that prior technological experience operates less as a stock of expertise than as an organizational basis for responding to technological changes in nascent industries.

This study examines how leading firms’ technology failures create spillovers that reshape the technological trajectories of other firms in nascent industries. We study three major failure incidents in the autonomous vehicle (AV) industry, where camera and LiDAR-based perception technologies competed for dominance: Tesla’s 2016 camera failure causing the first AV-related driver fatality, and the concurrent 2018 camera and LiDAR failures of Tesla and Uber, respectively, with the latter causing the first pedestrian fatality. Using a difference-in-differences approach, we find that a single technology failure increased industry job postings for both technologies, with a larger effect for the non-failing alternative. In contrast, when both technologies failed concurrently, industry firms shifted investment toward integrative sensor fusion solutions and complementary integration technologies. Firm responses varied with preexisting technological experience. Firms with experience in both technologies (generalists) responded faster and with larger investments, whereas single-technology firms’ (specialists’) responses were slower. Our study advances technology strategy research by showing how leading firms’ technology failures redirect industry search among followers in nascent industries where multiple technologies compete for dominance.

Firms acquire knowledge about their technology through experimentation, and failure during experimentation motivates different strategies to explore new sources of knowledge. We theorize two forms of exploration strategies: (1) technology exploration by searching across unfamiliar technological domains, and (2) capability exploration by hiring new expertise. We further theorize how responses differ between de novo and diversifying firms. Using prototype testing data from the California autonomous vehicle industry (2014–2023), we find that firms broaden technology search steadily as failures accumulate, while reconfiguring their capability base intensively at higher failure levels. De novo firms concentrate their response in technology exploration, while diversifying firms build new capabilities, revealing how structural conditions shape firms’ adaptive strategies as failure accumulation deepens uncertainty.