Aging, obsolescence, and organizational innovation

This paper investigates the relationship between organizational aging and i nnovation processes to illuminate the dynamics of high-technology industrie s, as well to resolve debates in organizational theory about the effects of aging on organizational functioning. We test hypotheses based on two seemi ngly contradictory consequences of aging for organizational innovation: tha t aging is associated with increases in firms' rates of innovation and that the difficulties of keeping pace with incessant external developments caus es firms' innovative outputs to become obsolete relative to the most curren t environmental demands. These seemingly contradictory outcomes are intimat ely related and reflect inherent tradeoffs in organizational learning and i nnovation processes. Multiple longitudinal analyses of the relationship bet ween firm age and patenting behavior in the semiconductor and biotechnology industries lend support to these arguments.(.)