Where Have all the Disruptions Gone? Co-adoption of Partially Substituting Technologies

Management Department; Faculty Adviser: Dan Levinthal

An extensive literature on competition between substitute technologies assumes that any buyer will only adopt a single technology. I propose that this assumption biases predicted outcomes, with implications for strategic decisions on technology trajectories, competition, the adoption and diffusion of new technologies, and long-term industry evolution. Buyers may choose the single option that best meets their range of needs but, given a range of needs, many will buy multiple technologies, to use each where most appropriate. You might predict that laptops will disrupt desktops, or that tablets will disrupt laptops. As partial substitutes, however, many buyers will adopt more than one of these technologies. In this paper I develop a formal model to better explore substitute competition, arguing that optimal technology trajectories in a “single purchase world” may be sub-optimal in a “multiple purchase world.” I further develop the model to show how adoption history affects technology adoption and diffusion, which can create roadblocks or bridges not explained by existing models. Based on the model, I develop hypotheses arguing that the introduction of a new substitute not only directly affects existing competitors through substitutability, but also indirectly affects the relative opportunities between competitors through indirect complementarity, where the introduction of a technology may induce switching between related substitutes. I test my predictions in the digital camera industry, using a novel dataset that allows me to use metadata from photos uploaded to a popular photo sharing site to track individual adoption and use over time. In line with predictions, user adoption of smartphones is associated with changes in adoption behavior for interchangeable lens cameras, as more distant substitutes, and the co-use of multiple partial substitutes.