How Demand Shocks “Jumpstart” Technological Ecosystems and Commercialization: Evidence from the Global Electric Vehicle Industry

Author:

Dutta Sunasir1ORCID,Vasudeva Gurneeta1ORCID

Affiliation:

1. Carlson School of Management, University of Minnesota, Minneapolis, Minnesota 55455

Abstract

We examine how exogenous demand shocks overcome ecosystem bottlenecks in the commercialization of an emergent technology. We argue that demand shocks that spur new technology adoption by niche users pull “hub” firms into country technology markets, despite ecosystem bottlenecks, thereby serving to “jumpstart” the process of ecosystem development and technology commercialization. By analyzing global electric vehicle markets over the period 2008–2017, we find that extreme weather events such as abnormal heat-related events spur adoption of electric vehicles by end users, thereby propelling automotive or hub firms’ entry into country technology markets, and the subsequent shift of their electric vehicle product portfolios toward the more radical version of the technology. Notably, such demand shocks propel firms’ commercialization strategy, despite ecosystem bottlenecks such as the lack of regulatory and economic inducements for adoption, relative absence of complements, and product market differences. After entry, entrant firms’ electric vehicle product portfolios transition from hybrids toward radical technology products and investments in complements, albeit contingent on their competitive market position in the legacy technology. We discuss the implications of these findings concerning the uptake of demand shocks, and their robustness to modeling choices, technological generations across extended timeframes, potential mediating forces, and boundary conditions owing to firm and country-market heterogeneity. Supplemental Material: The online appendices are available at https://doi.org/10.1287/stsc.2022.0075 .

Publisher

Institute for Operations Research and the Management Sciences (INFORMS)

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