Keywords: technological innovation, disruptive technology, value chain analysis, life cycle costing, financing, corporate venturing, R&, D partnerships, research and development, innovation, accounting standards, financial effects, joint ventures, hi-tech companies, high technology
A tale of two technologies: the financial chapter
Disruptive technology upsets the status quo by revolutionising the way customer needs are met. An intriguing aspect of this type of technology is that it is often developed and marketed by relative 'newcomers' to an industry and not by its leading firms. Researchers have proposed many strategic and marketing reasons for this pattern of innovation. In this paper, we explore how accounting standards and their consequent financial effects influence firms' decisions to invest internally in 'sustaining technology' and through joint ventures or research partnerships in 'disruptive technologies'. We illustrate that hi-tech companies use a combination of strategies for R&D investments.