Abstract for: Technology competition in fast paced environments: Path dependence and competition in Formula 1 1970-2013
Technological innovation is a widely studied subject. It can disrupt the competitive landscape in an industry sector in two ways: by changing the competences needed to compete in the market, or by changing market preferences. In both cases industry incumbents must learn fast enough to survive, and preserving the industry’s status quo. Creative accumulation has been proposed as a possible explanation for this. The paper outlines a link between absorptive capacity and learning at the organizational level and creative accumulation at the industry level. This link is explored in the context of Formula 1 racing -- an intensely competitive environment. The entry of new teams, regulatory changes and technological development harbour the potential to shift the competitive landscape and the relative performance of F1 teams. Nevertheless, from 1970 to 2013 only nine teams have won championships and even fewer continue to be successful to this day. A system dynamics model of Formula 1 competition is developed based upon the hypothesized absorptive capacity - creative accumulation link. The simulation results are quite close to actual real world results and the core explanatory logic is robust to different variations.