Technological changes offer firms some of the most important opportunities for maintaining corporate vitality. Indeed, there are many well known cases of firms capitalizing on technological opportunities. For instance, Sun Microsystems was among the first few firms in the computer industry to initiate the development of RISC chips that are now revolutionizing the computer industry (Alster, 1987). 3M has reaped benefits from its Post-it Notes as has Sony from its Walkman (Nayak & Ketteringharn, 1986). There are many other instances of such “technological foresights.”

There are also several instances of firms failing to capitalize on technological opportunities. For instance, RCA, a recognized leader in broadcasting, chose not to invest in FM technology (Hughes, 1989). Xerox Corporation was among the first few firms to develop many of the elements of the personal computer that we now use but was unable to reap commercial benefits from its efforts (Smith & Alexander, 1988). There are many other instances of such “technological oversights.”

Why do such technological oversights and foresights occur? One view is that oversights and foresights are inevitable because technological outcomes are uncertain and contingent upon a match between the internal capabilities of a firm and its external environments, and because technological choices are complex and constrained by the past. These are the challenges that the chapters in this book attempt to address in an effort to develop a theory of technological innovation.