Technological trajectories and industry evolution : the case of telecom switching industry

In this paper, we explore the relation between technological change and firm's competitive position. Following an emerging strand of literature we use patent data and network analysis in order to distinguish the main technological trajectories corresponding to different generations of telephone switches in the relevant time frame. The analysis of these trajectories includes the identification of key patents, their assignees and the reconstruction of their engineering and economic context. Besides the mapping of the technological development in the industry we are interested in showing how technological change affect firm's innovative strategy. In fact, theory has pointed out the local, nature of technological change, meaning that firms can explore only a limited portion of the existing search space. Furthermore, firms, depending on their position in the industry, have different technological preferences. The explicit research questions are: Does patent network analysis provide an applicable methodology for representing and analyzing the long run technological development in the telecommunication switching industry? How do firm's innovative performance change along different technological paradigms? The methodology proposed provides a valid method for describing and analyzing technological change in the considered industry. In particular, it highlights specific characteristics of the industry knowledge base just like the width of the search space, coupled with a process of sharp selection. The analysis at firm level points to the presence of differences in technological preferences between incumbents and new entrants. Furthermore, firms reveal heterogeneous technological performance not coupled with actual market performance showing that technological advantage doesn't secure survival.