Insisting or shifting technological trajectory? TMT attention and firms’ innovation responses to technology-forcing policy changes

Despite the critical role of technology-forcing policies in emerging technological innovation, little is known about firms’ innovation responses to technology-forcing policy changes (TFPC). Drawing on the attention-based view and capability theory, this study explores the relationship between the attention of the top management team (TMT) toward TFPC and firms’ innovation responses by analyzing a sample of 108 firms in China’s power lithium-ion battery industry. Our findings indicate that TMT attention is essential for driving firms’ innovation responses, with two types of TMT attention—attention to TFPC incentives and attention to TFPC pressures—exerting distinct effects on both on-trajectory and off-trajectory innovations. Furthermore, the interaction between these two types of attention hinders a firms’ innovation decision making. Additionally, the different moderating roles of technical and relational capabilities were revealed. Overall, these findings contribute to the existing literature on technology-forcing policies and technological trajectory innovation, providing valuable insights into emerging technological innovation across various economies and industries.