Generational technological change: Effects of innovation and local rivalry on performance

We tested the effects of innovation and market complexity on firm performance. Generational technological change-a major advance within a technology regime-fosters the emergence of niches and local rivalry. Findings hom the U.S. microcomputer industry between 1982 and 1991 suggest accelerated markets reward innovativeness that differentiates firms within a niche but not across niches. Changing niches confers a short-term penalty. Strong performers adopt new technology quickly, without changing niches.