Time and time again companies with leading positions in the market place lose their dominance when a radical change occurs in the technological basis. In some cases, the survival of companies is in jeopardy because old technology-investments hinder managers from adopting new technologies. Following on from the resource-based view, the purpose of this paper is to develop an approach which explains the ability of a company to generate radical product innovations through the willingness of managers and employees to put aside their existing knowledge and acquire new skills. The paper uses a causal analytic model to demonstrate the key influences on radical product innovations. The model incorporates formative indicators and the researchers use a partial least squares approach to fit it. Since the central termini of this approach embody hypothetical constructs, causal modeling is the best-suited approach to capture complex theoretical phenomena. The results show that the willingness to abandon investments strongly determines radical product innovations.
