How Performance Relative to Aspiration Levels Affects Strategic Response to Technological Discontinuity

We investigate how performance relative to aspirations affects firm response to a technological discontinuity by examining how incumbent firms in the U.S. computer industry responded to the introduction of the Personal Computer. We find that firms performing further below and further above their aspirations were more likely to adopt the new technology. Among adopters, those performing below historical aspirations were more likely to abandon their product strategy, while firms performing above aspirations pursued a hedge strategy by adding the new platform without abandoning their previous one.