Technological change, incumbent dominance, and knowledge base evolution in multi-technology industries: A patent analysis of the global automotive sector

Traditional models of creative destruction posit that established firms often stick to their dominant technology, exhibiting resistance to change even when new technologies emerge. However, recent perspectives challenge this view, suggesting that incumbents can adapt and innovate in response to technological disruption. This paper contributes to this debate by asking, "What factors influence incumbent firms' sustained market dominance amidst technological change?" We address this question by focusing on the automotive industry - a multitechnology sector characterised by products integrating diverse technological components with varying rates of change, and where incumbents serve a central role as "systems integrators." By analysing the patent portfolios of the top 25 automotive Original Equipment Manufacturers (OEMs) over a 30-year period (1990-2019), we provide valuable insights into innovation patterns within the automotive sector, specifically concerning the emergence of new technological fields and shifts in industry composition. Our analysis reveals that the structure and evolution of the industry's knowledge base inherently protect incumbents from new entrants, thereby explaining their dominance. This theoretical perspective, coupled with the observed transformation of the automotive industry, highlights the need to investigate whether incumbents' primacy in technological development alone could prevent a future industry shakeout in the absence of relevant investments in product and process innovation. The paper further argues that incumbent inertia amidst technological discontinuities presents a challenge for policymakers, emphasizing the potential need for regulatory intervention to accelerate the transition towards a greener automotive industry.