This study examines how firms shape their industry environment as a strategic response to the emergence of a dominant technology. We propose that firms whose technologies lost to the dominant one may enact endogenous shaping as a strategic response when their corporate purpose is threatened by the dominant technology. We also explore how the presence of purpose-driven firms affects the further evolution of the ‘losing’ technologies that these firms develop. We study purpose-driven shaping by conducting an empirical analysis of the photovoltaic (PV) cell industry. We find that firms developing ‘losing’ technologies in the PV cell industry enacted shaping to redesign the industry environment towards their vision for the future. The shaping activities of these firms reveal patterns of evolution that the theories of dominant design have not considered. Whereas the theories predict that innovation would shift from product to process after the emergence of a dominant design, for the ‘losing’ technologies we discover no such shift. The persistent pursuit of product innovation suggests that the ‘losing’ technologies may carry the potential to challenge the dominant technology when purpose-driven firms aspire to shape the industry environment. While technological discontinuity has been regarded in existing theories as an exogenous event that disrupts the dominant design, we explain how the dominant design may be disrupted endogenously by ‘losing’ technologies that are not radical or new-to-the-world.
