Quantitative model of firms’ weight using a gravity model in relative coordinates: Case study of photo film industry facing digital innovation

Abstract

Dynamic capabilities and organizational deadweights are essential managerial concepts that are crucial in navigating a turbulent environment. However, their measurements still rely on qualitative methods such as questionnaires and interviews, rather than factual data. This study aims to quantify firms' attitudes toward emerging technological innovations by applying a gravity model using patent data. Four major global firms in the photo film industry, forced into a crisis of existence by the advent of digital technologies, are investigated. The distance in the gravity model is calculated as the technological distance using the patent data of each firm. The weight of each firm, quantified from the coefficients estimated using the gravity model, is validated by comparing it with the historical information of the firms. Additionally, we estimate the changes in dynamic capabilities and organizational deadweights when firms in the industry could sense the threat of digital cameras. The results show that surviving firms had an increase in capabilities relative to disappeared firms.