THE ADVENT OF THE INTERNET AND THE ON-LINE BOOK TRADE: THE ROLE OF MANAGERIAL COGNITION AND THE LIABILITIES OF EXPERIENCE

Few technological innovations have created as much popular furor as the commercialization of the Internet. Does the Internet constitute a radical technological discontinuity? If so, will firms with more industry experience be able to act upon changes in the economic environment resulting from the advent of the Internet? This paper addresses these issues by extending and testing theoretical work in managerial cognition to the study of the relationship between length of industry experience and organizational decision-making during periods of technological discontinuity. Specifically, we explore how the mental models of managers contributed to an industry-wide dominant logic guiding the behavior of experienced proprietors in the used and out-of-print book trade. This research finds that the logic that served the proprietors of these small firms so well during periods of stability may prevent them from recognizing, evaluating, and responding to fundamental changes in the competitive environment. Theory During periods of technological discontinuity decision-making premised on a dominant logic can lead to two types of errors. First, basic shifts in the competitive environment can result i