Research Interests: innovation, business ecosystems, technology strategy, industry evolution
Rahul Kapoor is the David W. Hauck Professor at the Wharton School of the University of Pennsylvania. In his research, Rahul focuses on the management of industry disruption and ecosystems related to new technologies and business models. He has published numerous articles on these topics in leading peer-reviewed and practitioner journals from a perspective of both established firms and start-ups. He is the past Chair of the Technology and Innovation Management Division of the Academy of Management. He also serves as an Associate Editor of the Strategic Management Journal, and is on the Editorial Boards of Organization Science and Strategy Science. At Wharton, Rahul teaches undergraduate, MBA, Executive MBA, and PhD courses on technology and innovation strategy. He is also an active contributor to Wharton’s Executive Education, teaching in both the customized and open enrollment programs.
Rahul has received several awards for his research and teaching including the inaugural Academy of Management (Technology and Innovation Management Division) Emerging Scholar Award, the Strategic Management Journal Best Paper Prize, and Wharton Teaching Excellence Award over multiple years. He has also advised and consulted for several firms with respect to launching new innovation initiatives. Prior to joining academia, he spent over 7 years in the high-tech industry where he worked for Texas Instruments and was involved with two startups, one of which he co-founded.
Abstract: What makes some managers and entrepreneurs better at forecasting the industry context than others? We argue that, regardless of experience or expertise, a learning-based forecasting behavior in which individuals attend to and incorporate new relevant information from the environment into an updated belief that aligns with the Bayesian belief updating process is likely to generate superior industry foresight. However, the effectiveness of such a cognitively demanding process diminishes under high levels of uncertainty. We find support for these arguments using an experimental design of forecasting tournaments in the managerially relevant context of the global automotive industry from 2016-2019. The study provides a novel account of individual-level forecasting behavior and its effectiveness in an evolving industry, and suggests important implications for managers and entrepreneurs.
Shiva Agarwal and Rahul Kapoor (Forthcoming), Value Creation Trade-off in Business Ecosystems: Leveraging Complementarities while Managing Interdependencies, Organization Science.
Abstract: We explore the role of ecosystem-level complementary technologies in explaining an innovation’s commercialization success. On the one hand, connections with complementary technologies help innovations create more value for their users. On the other hand, it can also limit the focal innovation’s value creation by exposing them to performance bottlenecks and adjustment costs. We further draw on the notion of specialization of complementary assets to ecosystems by considering complementary technologies that are specialized to a focal ecosystem and those that are available across multiple ecosystems. We highlight that while those complementary technologies that are specialized to an ecosystem facilitate greater value creation, they are more likely to subject the focal innovation to performance bottlenecks. Evidence from 244,034 apps launched by software developers for Apple’s iPhone ecosystem during 2008-2015 offers strong support for our framework.
John Eklund and Rahul Kapoor (2021), Mind the Gaps: How Organization Design Shapes the Sourcing of Inventions, Organization Science.
Abstract: An important problem for many firms is sustaining their rate of innovation by launching new products on an ongoing basis. Accordingly, firms need to replenish their innovation pipelines with new inventions as existing inventions are weeded out or reach fruition. The replenishment can be done through internally generated inventions or through externally sourced inventions via licensing, alliance, or acquisition modes. Drawing on incentives- and knowledge-based views of the firm, we consider the difference in managerial decision making between centralized and decentralized research and development (R&D) organization designs and how it impacts firms’ propensities to draw on externally sourced inventions. As compared with centralized designs, decentralized designs are associated with greater incentives for managers to replenish their firms’ pipelines but are limited in terms of intraorganizational knowledge flows that can facilitate the creation of inventions. We explore these mechanisms using a novel data set of firms’ sourcing decisions within the pharmaceutical industry between 1996 and 2015. We find that firms with decentralized R&D designs replenish their pipelines with a higher proportion of externally sourced inventions than do firms with centralized designs. This difference is found to be mainly attributed to external sourcing via licensing and for inventions of moderate novelty. This study offers an important contribution to the question of how firms organize for innovation, highlighting the relationship between internal R&D organization design and the external sourcing of inventions. In so doing, it illustrates that the choice of organization design in terms of centralization or decentralization can shape a firm’s locus of innovation.
Rahul Kapoor and Thomas Klueter (2021), Unbundling and Managing Uncertainty Surrounding Emerging Technologies, Strategy Science, 6 (1), pp. 62-74.
Abstract: Emerging technologies, while offering enormous potential for economic growth, carry a high degree of uncertainty regarding whether and when that potential may be realized. How can firms evaluate the uncertainty surrounding an emerging technology? To address this question, we offer a structured approach that unbundles the uncertainty surrounding emerging technologies, incorporating both supply- and demand-side factors. These include the focal technology itself, the potential market applications, the users adopting the technology, the ecosystem of activities that support the technology’s value creation, and the business model with which the technology is being commercialized. We further consider that the uncertainty surrounding each of these sources may not be resolved in a vacuum, but, rather, that it may interact with other sources of uncertainty in a pooled, sequential, or reciprocal way. Such a structured approach of evaluating uncertainty can help firms and managers in terms of the cognitive processes and the managerial practices and provide microfoundations for dynamic managerial capabilities. We illustrate the applicability of the framework for two emerging technologies—gene therapy and autonomous vehicles—and how the framework can be integrated with prominent managerial practices for managing uncertainty.
Natalya Vinokurova and Rahul Kapoor (2020), Converting Inventions into Innovations in Large Firms: How Inventors at Xerox Navigated the Innovation Process to Commercialize Their Ideas, Strategic Management Journal, 41 (13), pp. 2372-2399.
Abstract: How can inventors in large firms navigate their organizations’ innovation processes to commercialize breakthrough inventions? Using historical case studies of three breakthrough inventions at Xerox—office workstations, personal computers, and laser printers, we illustrate how inventors navigated multiple evaluation criteria across different organizational units to attract resources towards inventions. These criteria stemmed from Xerox's first successful breakthrough invention, the 914 copier and the specific objectives of the organizational units. We highlight two approaches deployed by Xerox inventors—searching across the organization for more favorable evaluation criteria and shaping the evaluation criteria to help attract resources. While searching leveraged the heterogeneity of evaluation criteria across the different organizational units, shaping required the presence of evaluative uncertainty with respect to the appropriate criteria for evaluating breakthrough inventions.
Martin Ganco, Rahul Kapoor, Gwendolyn K. Lee (2020), From Rugged Landscapes to Rugged Ecosystems: Structure of Interdependencies and Firms’ Innovative Search, Academy of Management Review.
Abstract: Managers and academics are increasingly viewing innovating firms as being interdependent on other firms in the business ecosystem. But how might the structure of interdependencies shape the innovativeness of firms in an ecosystem? To answer this question, we develop a search-based theory that considers a multiplicity of upstream and downstream firms simultaneously innovating in an ecosystem, contributing to and searching for novel combinations of components. We conceptualize two types of structural interdependencies between firms in an ecosystem based on the structure of technological interactions between components and the structure of input–output flows between stages of production. Using a simulation model, we show that downstream firms can benefit from mixing and matching components produced upstream, whereas upstream firms can benefit from optimizing their search more narrowly around their focal components. Importantly, these benefits that accrue to upstream and downstream firms are significantly impacted by the structure of technological and flow interdependencies in the ecosystem.
Rahul Kapoor and Thomas Klueter (2020), Progress and Setbacks: The Two Faces of Technology Emergence, Research Policy, 49 (1).
Abstract: Emerging technologies are an important driver of economic growth. However, the process of their emergence may not only be characterized by technological progress but also by setbacks. We offer a perspective on technology emergence that explicitly incorporates setbacks into the technology's evolution and explains how industry participants may react to setbacks in emerging technologies. We consider that the locus of innovation in an emerging technology encompasses different types of organizations (industry incumbents, entrants and public research organizations (PROs)) who operate in different institutional environments, and explore how these organizations react to setbacks in terms of their R&D efforts. We study two emerging biotechnologies in the global pharmaceutical industry - gene therapy (GT) and monoclonal antibodies (mAbs). The emergence of both technologies during the 1990s was punctuated by periods of setbacks. We observe a gradual increase in industry participants' R&D efforts during periods of progress and a significant decline in those efforts immediately following setbacks. The decline in R&D efforts was more pronounced for firms than for PROs as well as for those firms that were listed on the stock market in contrast to those that were privately financed. Finally, the decline in R&D efforts towards GT was much more pronounced for those organizations located in countries with high capital fluidity. These findings reinforce that organizational and institutional characteristics that are typically attributed to facilitate R&D efforts towards emerging technologies do induce greater levels of those efforts during periods of progress. However, the same characteristics are also associated with a significant decline in R&D efforts immediately following periods of setbacks. Overall, the study illustrates how setbacks reconfigure the locus of innovation in emerging technologies and offers a richer perspective on technology emergence as one that is rooted in both progress and setbacks. In so doing, it highlights the challenges of sustaining technological progress and offers guidance for policy.
John Eklund and Rahul Kapoor (2019), Pursuing the New while Sustaining the Current: Incumbent Strategies and Firm Value during the Nascent Period of Industry Change, Organization Science, 30 (2), pp. 383-404.
Abstract: This study considers the nascent period of industry change when the prevalent business model is being threatened by a new model, but there is significant uncertainty with respect to whether and when the new model will dominate. We focus on the challenge of incumbents pursuing both models simultaneously during the nascent period, and the implications on their firms’ valuations. Our theory is premised on the adjustment costs incurred by incumbents associated with the sharing of resources across business models and the conflict between managers vying for limited resources. While firms’ assets and competitive environments are key drivers of their value, we argue that they also impact adjustment costs. Evidence from the U.S. electric utility industry, which is undergoing a change from a centralized to a decentralized model, offers strong support for our arguments. The greater the level of incumbents’ assets that are specific to the existing model, and the greater the level of competition that they face, the lower are their firms’ valuations when investing in the new model relative to when investing in the existing model. Hence, ironically, those incumbents potentially most threatened by the change seem to be least rewarded for their efforts to renew themselves. However, pursuing the new model via alliances can help mitigate adjustment costs. The study uncovers the challenges that incumbents face as they pursue the new model in tandem with the existing dominant model, and helps explain why some incumbents may successfully navigate the changing industry landscape while others may stumble.
Rahul Kapoor (2018), Ecosystems: Broadening the Locus of Value Creation, Journal of Organization Design.
Abstract: The objective of this article is to introduce readers to the emerging research stream on business ecosystems, explicating the novelty and the usefulness of ecosystem-based theorizing, and hoping to pave the way for an influential but cumulative body of knowledge. The key tenets within an ecosystem-based perspective are outlined, and used to contrast this emerging perspective from other established perspectives of value chains, supply chains, alliances and networks. The article concludes by discussing the research approaches that can be employed to study ecosystems and the implications for organization design.
Rahul Kapoor, Thomas Klueter, James M. Wilson (2017), Challenges in the Gene Therapy Commercial Ecosystem, Nature Biotechnology, 35 (9), pp. 813-815.
Abstract: The emergence of biotech has resulted in a rich ecosystem of different types of actors contributing to the technological advance. Despite the enormous promise of biotech-based therapeutics, there is substantial uncertainty regarding when scientific discoveries will emerge, whether these discoveries will achieve clinical success, and how commercialized treatments will create value. Here we shed light on two contrasting episodes of technological advance, in monoclonal antibodies (mAbs) and gene therapy, and the roles played by different types of institutional actors from the 1990s to today. Both technologies created significant opportunities within the biotech ecosystem. But mAbs have followed a smooth trajectory of progress, whereas gene therapy has been slower to emerge from a set of clinical setbacks at the turn of the twenty-first century. Here, we contrast these two commercialization paths to shed light on the challenges in the gene therapy ecosystem.
The course is designed to meet the needs of future managers, entrepreneurs, consultants and investors who must analyze and develop business strategies in technology-based industries. The emphasis is on learning conceptual models and frameworks to help navigate the complexity and dynamism in such industries. This is not a course in new product development or in using information technology to improve business processes and offerings. We will take a perspective of both established and emerging firms competing through technological innovations, and study the key strategic drivers of value creation and appropriation in the context of business ecosystems. The course uses a combination of cases, simulation and readings. The cases are drawn primarily from technology-based industries. Note, however, that the case discussions are mainly based on strategic (not technical) issues. Hence, a technical background is not required for fruitful participation.
Special course arranged for Wharton MBA students, focused on global business, management and innovation.
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What is it like to take a Wharton class? Here’s a look inside “Technology, Innovation, and Entrepreneurship in the New Space Era,” a one-of-a-kind elective led by Management Prof. Rahul Kapoor. Course Overview With Prof. Rahul Kapoor Who can take this course? Wharton MBA students. What is it about? Over…Wharton Stories - 06/03/2022