Co-evolutionary Dynamics of Technological Innovation: Dynamic Capabilities Perspective

How does technological innovation emerge and evolve? From the perspective of dynamic capabilities, I approached such an inquiry by specifying organization-specific transformation mechanisms from its resource base to dynamic capabilities for technological innovation. To explore the emergence of technological innovation, I studied a technology-latecomer specializing in process innovation and then transforming into technology-leader. To illustrate the evolutions of technological innovation, I examined both inter-organizational and intra-organizational co-evolutionary dynamics through sequential strategic renewals. As a result, this longitudinal case-study on the first dedicated semiconductor foundry, TSMC, located in an emerging economy, shows two unique co-evolutionary paths toward technological innovation. First, the inter-organizational path of multi-motor co-evolutionary mechanisms demonstrated TSMC’s migration from the mechanism of managed selection in its creating phase of mature process-innovation during 1987~1998, to the mechanism of hierarchical renewal in its extending phase of advanced process-innovation during 1999~2001, and then the mechanism of holistic renewal in its modifying phase of product innovation since 2002. Second intra-organizational path of multi-phase dynamic capabilities further demonstrated how interlocking strategies and routines form and transform technological innovation. In each renewal, I highlighted how variety-inducing strategies knit with variety-reducing strategies, as well as how variety-inducing and variety-reducing routines knot those ambidextrous strategies firmly together. Based on such co-evolutionary dynamics, I inducted the cross-sectional Y-paths and longitudinal Z-paths as the transformation mechanisms toward technological innovation.