Who changes course? The role of domain knowledge and novel framing in making technology changes

Abstract

The foundations of established firms are laid when, early in life, venture executives explore dynamic landscapes in search of opportunities. During this search, the executive team processes information that might signal the need to change, and their cognitive flexibility in processing this information affects the likelihood of such changes. While executive backgrounds affect this information processing, current literature does not identify how executive backgrounds impact the extent of change a firm undertakes. Therefore, we compare the effects of teams dominated by domain insiders, domain outsiders, and complementary teams (blending insiders and outsiders) on the likelihood of different degrees of technology change. In an examination of the population of U.S. solar photovoltaic manufacturing ventures from 1992 to 2007, we find that teams with extra-domain expertise, particularly at the CEO level, undertake more significant technology change. By contrast, intra-domain expertise has an inertial effect on change: even when combined in complementary team configurations, domain expertise reduces chances of significant technology change. These findings expand the discussion of types and antecedents of organization change, top management team composition, and the psychological foundations of strategy.