Aging, Obsolescence and Organizational Innovation

This paper investigates the relationship between organizational aging and innovation processes to illuminate the dynamics of high-technology industries, as well to resolve debates in organizational theory about the effects of aging on organizational functioning. We test hypotheses based on two seemingly contradictory consequences of aging for organizational innovation: that aging is associated with increases in firms’ rates of innovation and that the difficulties of keeping pace with incessant external developments causes firms’ innovative outputs to become obsolete relative to the most current environmental demands. These seemingly contradictory outcomes are intimately related and reflect inherent tradeoffs in organizational learning and innovation processes. Multiple longitudinal analyses of the relationship between firm age and patenting behavior in the semiconductor and biotechnology industries lend support to these arguments.