How Much Do Your Co-opetitors’ Capabilities Matter in the Face of Technological Change?

Firms often lose their competitive advantage when a technological change renders their existing capabilities obsolete. An important question that has received little or no attention is, what happens to these firms’ competitive advantage when the technological change instead renders obsolete the capabilities of their co-opetitors—the suppliers, customers, and complementors whose very success may underpin that of the firm and with whom it must collaborate and compete. This paper explores the effects on a firm of the impact of a technological change on its co-opetitors. It argues that a firm’s post-technological change performance decreases with the extent to which the technological change renders co-opetitors’ capabilities obsolete. It uses detailed data on the adoption of RISC (Reduced Instruction Set Computer) technology by computer workstation makers to demonstrate the need to view resources as residing in a network and not in the firm alone. Copyright  2000 John Wiley & Sons, Ltd.