AN EMPIRICAL EXPLORATION OF A TECHNOLOGY RACE

An extensive theoretical literature examines technological competition , and in particular whether leaders maintain their standing. These mod els, however, have received little empirical support. I examine innova tion in the disk drive industry, an environment particularly conducive to identifying racing behavior Strategic variables prove significant in explaining the decision to innovate. The patterns are in accord wit h Reinganum's work: firms that trail the leader innovate more. I add c ontrols for technological opportunity, financing constraints, and firm turnover. When firms manufacture drives for internal use or there are many entrants, and strategic interactions may be less important, the effects are less pronounced.