Sailing Ship Effect

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MGMT002: Technology & World Change

AY 2009-2010, Term 2

Student Paper Review, Howells (2002)
The response of old technology incumbents to technological competition – Does the sailing ship effect exist?

Prepared for:
Dr Terence Fan

Prepared by:
Nicole Isabella Aw Su Sien (G14)

Howells presents the audience with a critical view of the ‘sailing ship effect’ and postulates that it is triggered by misinterpretations based on insufficient knowledge, and that the mere existence of this effect is rare. This ‘sailing ship effect’ is the process whereby the advent of a new technology engenders a response aimed at improving the incumbent technology. I am inclined to Howells’ view and will further demonstrate this below.

There is evidence to believe that the sailing ship effect is existent in the world today. Cooper and Schendel (1988) considered 7 different cases and I would like to focus on the case between vacuum tubes and the transistor. A simple timeline of the development of the vacuum tubes has shown that the old technology (vacuum tubes) continued to be improved and reached its highest stage of technical development only after the new technology (transistor) was introduced. Nonetheless, there is still insufficient evidence to definitely conclude that the sailing ship effect did take place.

The sailing ship effect is challenged due to the number of externalities involved in the technological development of any product, making it difficult to conclude that accelerated improvements made by incumbent technology is driven solely by the emergence of new ones. Granted, there is a timely connection between the arrival of new technologies and the accelerated improvement of old ones, however, one must question the genuine motivation for this action (government funding, ‘normal’ intra-industry competition, lock-in effect or arrival of new technology). The Flettner rotor ship, for example, was a...
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