Strategic Renewal via Generational Product Innovation: The Impact of Market Concentration on Firms’ Responsiveness to Competitive and Complementary External Events

Generational product innovation (GPI) is an important but understudied form of strategic renewal strategy. The limited discussion of GPI in the organizational strategy literature argues that firms benefit from internally-driven GPI strategies, such as time-based pacing and serendipitous timing. While such internally-driven strategies may predominate when firms face diffuse competition, the literature underemphasizes the point that as market concentration increases, firms need to be increasingly responsive to external events. This study examines how competitive market conditions shape the responsiveness of firms’ generational product innovation releases to the introduction of competitor and complementary innovations in the external marketplace. The results show that as market concentration increases within the U.S. packaged software industry, introduction of both competitive and complementary innovations act as a spur to overcome firms’ tendencies to follow internal rhythms of product introduction timing. The results suggest that increasing market concentration leads to greater interdependence of innovation strategies in an industry – including interactions both with competitors and with other players in a larger system of complementary products – shifting firms from relying on internal rhythms and forcing them to undertake renewal strategies that respond to external