Inderscience Publishers

Industry evolution and competence development: the imperatives of technological convergence

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This article examines the growing impact of technological convergence on the evolution of industry structure and the development of core competences, knowledge, and skill sets within firms. Technological convergence occurs when advances or innovations commercialised in one industry begin significantly to influence or change the nature of product development, competition, and value-creating processes in other industries. By promoting the creation of higher value-added substitute or complementary products that redefine an industry's structure, convergence may lead to competitive conditions in which one industry's products or services are increasingly linked, absorbed, or blended with another industry's expanded range of offerings. In turn, convergence leads to the steady erosion of once-distinct boundaries among industries as they begin to share more similar competitive, market-based, and technological characteristics. As industries become closer, firms need to learn and invest in new types of core competences that allow them to deploy value-creating skills and core product platforms, which can be easily reconfigured and adapted to a wider base of customers across different markets. Sustained learning of new core competences requires the cultivation of multiple dynamic routines that foster the creation of new sources of knowledge, insights, and capabilities. Internal R&D and strategic alliances with partners from a range of different industries can promote corporate strategies that enable firms to enact upon converging environments.

Keywords: convergence, industry evolution, industry structure, core competence, core skills, barriers to imitation, modularity, dynamic routines, core rigidities, creative destruction, value chain, strategic alliances

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