Technology Analysis & Strategic Management

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Model for identifying firm’s product innovation

dynamics: applied to the case of the Korean
mobile phone industry

Woolrim Lee, Jungsub Yoon, Jörn Altmann & Jeong-Dong Lee

To cite this article: Woolrim Lee, Jungsub Yoon, Jörn Altmann & Jeong-Dong Lee (2021)
Model for identifying firm’s product innovation dynamics: applied to the case of the Korean
mobile phone industry, Technology Analysis & Strategic Management, 33:4, 335-348, DOI:
10.1080/09537325.2020.1813271

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Published online: 30 Aug 2020.

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TECHNOLOGY ANALYSIS & STRATEGIC MANAGEMENT
2021, VOL. 33, NO. 4, 335–348
https://doi.org/10.1080/09537325.2020.1813271

Model for identifying firm’s product innovation dynamics: applied

to the case of the Korean mobile phone industry
a,b a,c a
Woolrim Lee , Jungsub Yoon , Jörn Altmann and Jeong-Dong Leea
a
Technology Management, Economics and Policy Program, Seoul National University, Seoul, Republic of Korea;
b
Advanced Institutes of Convergence Technology (AICT), Gyeonggi-do, Republic of Korea; cScience and Technology
Policy Institute (STEPI), Sejong-si, Republic of Korea

ABSTRACT ARTICLE HISTORY

Existing studies on product innovation dynamics depend on patent Received 15 October 2019
analysis and only focus on the analysis of technological evolution. This Revised 21 July 2020
study proposes a new model that can analyze complex products with Accepted 14 August 2020
many technological features and that are continuously improved. The
KEYWORDS
suggested model considers the relationship between product models Product innovation
through a similarity measure and social network measures. An empirical dynamics; social network
analysis has been conducted on data about smartphones that had been analysis; product evolution;
sold in the Korean market from 2010 to 2015. The results show the intra-firm and inter-firm
inter-firm and intra-firm evolutionary patterns and identify innovation evolution
strategies (i.e. imitation or innovation) of each smartphone
manufacturer. Our research contributes to existing research on product
evolution by conducting analyses at product-level instead of firm-level
and by considering the features of products. From a managerial
perspective, our new model helps decision-makers monitoring new
product developments in the industry and establishing strategies for
their next product models.

1. Introduction
As technologies advance at an unprecedented pace, the market changes rapidly. Firms release new
products continuously, and consumers look forward to new product launches. Each new product
model is the result of innovation, and product evolution represents the accumulation of innovations
of product models within a product category over time. For this reason, product evolution can be
described through changes of product models.
Products are the results of combining dominant and state-of-the-art technologies (Tripsas 2008).
In addition, as firm’s established routines are reflected in products (Nelson and Winter 1982), the
development of industries can be monitored through the changes in products. Products are con-
sidered as the results of strategic decisions in new product developments, which are represented
by innovation, imitation, and routinisation (Beckenbach, Daskalakis, and Hofmann 2012). In the
process of a new product development, a firm releases a new product, which is similar to or
different from the products of other firms. The former is defined as the result of inter-firm evolution,
while the latter is the result of intra-firm evolution.
Most existing research on product evolution have been conducted at firm-level or sector-level
(Iwai 2000; Ma and Nakamori 2005; Meyer and Utterback 1993; Otto and Wood 1998), despite the

CONTACT Jungsub Yoon jungsub@stepi.re.kr Technology Management, Economics and Policy Program, Seoul National
University, 1 Gwanak-ro, Gwanak-gu, Seoul 08826, Republic of Korea; Science and Technology Policy Institute (STEPI), 370
Sicheong-daero, Sejong-si 30147, Republic of Korea
© 2020 Informa UK Limited, trading as Taylor & Francis Group
336 W. LEE ET AL.

necessity of research on product-level (Yoon et al. 2014). Furthermore, some research used product
evolution models (e.g. models used in Khanafia and Situngkir (2006) and in Valverde and Solé (2015))
only, not considering product. These models are static and insufficient to identify firms’ innovation
strategies through inter-firm and intra-firm evolutionary patterns of products, even though, evolution
is a dynamic and relation-oriented concept. The relevance of our research comes from the fact that
solving these shortcomings of existing research would allow describing the inter-firm and intra-firm
evolutionary patterns of products.
To solve these shortcomings, this research suggests a new social-network-analysis-based model
for analysing product evolution and verifies this model empirically. Social network analysis (SNA)
has many advantages as an analysis method. Firstly, SNA can measure interdependent patterns of
relationships between actors, different from traditional statistics and data analysis (Wasserman and
Faust 1994). Secondly, SNA is suitable for reflecting dynamic properties. As almost all systems
change over time according to the law of nature (Van Alstyne 2013), the consideration of dynamic
properties is essential to describe the reality. Thirdly, network visualisation through SNA can be a sig-
nificant cornerstone that enables to observe the network evolution (Trier 2008). Finally, through the
investigation of network structure, innovative actors can be identified, and the flow of resources, such
as information and knowledge, can be detected. Due to these advantages, SNA is selected for
describing actual product evolution.
In this research, two research questions are raised: What are the specific features of the
model for describing product evolution at product-level? How can the suggested model identify
evolutionary patterns of product innovation as well as inter-firm and intra-firm evolutionary
patterns?
To answer the two research questions, we designed a model based on similarities between
product models, showing the relationship between product models in a product category. A simi-
larity threshold is used for identifying the evolutionary patterns within the product network over
time for the entire product category, for firms, and between firms. A real product network is built
with data about smartphones that have been sold in the Korean market from 2010 to 2015. The
data includes products launched by four major firms: Apple, Samsung Electronics, LG Electronics,
and Pantech. In our product network, each node represents a smartphone model, which is defined
through its features, and all nodes are chronologically arranged by the release date of each
product. An edge between two nodes represents the existence of a similarity between two
smartphones.
The results show that, first, the evolutionary patterns of smartphones can be expressed at
product-level through our model and can be identified through visualisation. Second, the applica-
bility of our model is demonstrated using empirical data about smartphones. Third, within the
smartphone product network, the inter-firm and intra-firm evolutionary patterns can be observed
at the same time. This helps understanding strategies of firms. Forth, product models, that play an
important role in the evolutionary process, can be revealed through the analysis of network
characteristics with network measures. An evolutionary process represents here a process that
adapts and evolves over time, representing the development of an industry through launched
product models.
There are a few implications based on our results. From an academic perspective, the research on
product evolution can be extended to consider the product-level and to take into account dynamic
properties over time. From a managerial perspective, it can help managers and decision-makers to: (i)
monitor the impact of existing products in the evolutionary process; (ii) identify the evolutionary pat-
terns of a product category and the inter-firm and intra-firm evolutionary patterns of products at the
same time; and to (iii) establish strategies for the development of new products based on the under-
standing of other firms’ strategies.
The remainder of this paper is organised as follows. In Section 2, the theoretical background is
reviewed. The new model is described in Section 3. In Section 4, the empirical analysis and its
results are presented. Finally, in Section 5, we conclude this study.
 TECHNOLOGY ANALYSIS & STRATEGIC MANAGEMENT 337

2. Theoretical background
2.1. Product innovation dynamics from an evolutionary perspective
Product innovation is the key to survival of firms, and it helps firms to occupy an advantageous
position in the market (Christensen 1997b; Sood and Tellis 2005). Through product innovation,
firms can increase or maintain their market share and have an opportunity to enter a new
market (OECD/Eurostat 2005). Indeed, many studies have proved that innovative firms survive
longer in the market than firms lacking innovative activities (Cefis and Marsili 2005, 2006;
Fontana and Nesta 2009).
Type of product innovation is divided into incremental innovation and radical innovation. The
former represents a change in a technology applied to the product, while the latter means new tech-
nology is adapted to the product (Fontana, Nuvolari, and Saviotti 2009). The continuous introduction
of new product models of a product category in the market over time represents the evolution of a
product. This follows the ideas of Christensen (1997a) that product innovation dynamics (i.e. product
evolution) is exhibited in the cumulative changes in features of product models within a product cat-
egory. Incremental innovations or radical innovations are represented in those cumulative changes
(Wagner and Rosen 2014).
Imitation is a way for firms to copy the most advanced or popular product model. It saves devel-
opment costs, while satisfying more consumers due to a lower product model price (Iwai 2000;
Nelson and Winter 1982). If a product model succeeds in the market, some features of the product
model will significantly affect the next generation models. In other words, through imitation, a
feature considered as a success factor is highly likely to appear in a product model of the next gen-
eration (Rivkin 2000).
Both, product innovation and imitation, contribute to the evolutionary process of products.
Previous studies on product evolution usually focus on firm-level or sector-level and have
investigated the environments that accelerate product evolution (Bonaccorsi, Giuri, and Pierotti
2005; Kapoor and McGrath 2014; Kim, Yoon, and Lee 2020). Only a few studies analyzed
product evolution at product-level. Khanafia and Situngkir (2006) illustrate phylogenetic tree of
mobile phones, which categorises mobile phones based on technological features. Valverde
and Solé (2015) take the chronological order of products into account by applying SNA, but
they only focus on the parent–child relationship between products, neglecting the features
representing the products. To overcome the limitations of existing research, we suggest a
new model for describing product evolution by concentrating on product features. As a
product model is the result of combining various innovations, we follow the idea that a
product is defined through its features over time.
SNA for product evolution helps identifying the relationship between product models, which con-
tains information on interactions between firms’ routines. Firms’ routines, which are regular and pre-
dictable behaviour patterns of firms, play also an important role having a characteristic of being
transferred within firms (Nelson and Winter 1982), as they are built on experience and have been
developed over a long time period. Firms’ routines are hard to be imitated by other firms (Day
1994; Dierickx and Cool 1989; Nelson and Winter 1982). Consequently, routines of a firm are inherent
in the firm’s product models, representing the strategic foundation of the firm. Thus, it is not only
essential to identify the evolutionary patterns of products but also to understand the internal beha-
viours of firms (intra-firm evolutionary patterns) and the interaction between firms (inter-firm evol-
utionary patterns).

2.2. Network analysis and structural characteristics of innovation

Network analysis has been applied in various studies such as the investigation of knowledge flows
(Leon et al. 2017), the decision-making for hiring and transferring employees (Zhu, Watts, and
Chen 2010), the analysis of social and large infrastructure systems (Barrat et al. 2004), and the
338 W. LEE ET AL.

understanding of innovation in the management field (Obstfeld 2005). The investigation of a

knowledge base, such as the information about technology, is important for comprehensively
understanding the dynamics of innovation within industry sectors, and the change in knowledge
and in a knowledge base are significant factors for identifying the evolution within an industry
(Malerba 2006).
A node-link representation is generally used for visualising a network (Zhu, Watts, and Chen 2010).
A node represents an actor, and a link between two nodes shows the relationship between the actors.
From a network perspective, various kinds of flows (e.g. information, knowledge, or ideas) or
exchanges between nodes can be investigated through the links of a network (Borgatti and
Halgin 2011). Moreover, studying linkages in a network can reveal the interdependences among
all nodes, even those that are not connected directly (Borgatti and Halgin 2011). Network analysis
provides the means to conduct these analyses. In particular, network analysis can help investigating
network-related node properties within network structures.
The investigation of network structures is important to catch innovation opportunities. Node pos-
itions are related to an agent’s role in a society (Scott 1991), to innovation performance of an agent
(Kim, Lee, and Altmann 2015), and to core and peripheral technologies (Chen and Guan 2015). In a
network, a node occupying a central position is considered an innovative agent, which learns through
the relations with other agents in the systems (Burt 1980). A node that is located in a bridge position
among other nodes can facilitate information sharing and can control the information flow between
certain groups (Leon et al. 2017). Thus, it is necessary to identify the position of each node in the
network (Zhu, Watts, and Chen 2010).
A node position is detected by measuring the centrality of a node. Among various centrality
measures, degree centrality is the most fundamental (Freeman 1979; Zhu, Watts, and Chen
2010). Degree centrality of a node measures the number of links of a node (i.e. the linkages
with other nodes) in the network. It describes how strongly a node is connected and how power-
ful a node is within a network (Krafft and Quatraro 2011; Zhu, Watts, and Chen 2010). For
example, a node with a high degree centrality is able to diffuse information quickly in a
network (Leon et al. 2017). As our product network used for the analysis is a directed graph,
in-degree centrality and out-degree centrality need to be distinguished. They have different mean-
ings from an evolutionary perspective. In-degree centrality can help identifying whether new pro-
ducts imitate features of existing products and the extent of imitation. Out-degree centrality can
show whether existing products affect the next-generation products. For this reason, those two
node degree centralities have been applied to the proposed smartphone network for identifying
those product models that contributed to the evolution of the product category. In-degree cen-
trality (DCin ) and out-degree centrality (DCout ) of each product model (Pi ) are measured through
the following equations (Freeman 1979):

i−1
DCin (Pi ) = xPh Pi (1)
h=1

where Pi : the focal product model; Ph : product model launched before the release of Pi ; xPh Pi :
number of links from Ph to Pi .

n
DCout (Pi ) = xPi Pj (2)
j,j.i

where Pj : product model launched after the release of Pi ; n: total number of product models in the
product network of a product category; xPi Pj : the number of links from Pi to Pj .
For both these measures, it is assumed that the product models are sorted according to their
release date.
 TECHNOLOGY ANALYSIS & STRATEGIC MANAGEMENT 339

3. Methodology
3.1. Similarity measure
A product model undergoing an incremental innovation is similar to the previously released product
models and, especially, has the highest similarity with a product released before. If a product goes
through a radical innovation in the process of evolution, however, its similarity with the previously
released products is considerably lower. Thus, considering similarities between products is reason-
able for detecting innovation patterns in the evolutionary process of products.
For measuring similarities between products, the Jaccard index has been chosen. Among various
indices, the Jaccard index has widely been used and is a useful statistic method, measuring the
overlap of features of two different elements (Birks 1987; Goodall 1966). In addition, this index is suit-
able for describing the evolutionary phenomena, as it has generally been utilised in the biology fields
(Choi, Cha, and Tappert 2010). The Jaccard index is measured as follows:
|Pi > Pj |
J(Pi , Pj ) = , i=j (3)
|Pi < Pj |
where Pi and Pj are two different product models. While |Pi < Pj | represents the number of features,
which are in Pi or Pj , |Pi > Pj | denotes the number of features, which are in both Pi and Pj . The
maximum value of similarity is 1, and the minimum value is 0.

3.2. Product network construction

To identify evolutionary patterns of products, a product network for a product category is con-
structed. In this network, a node denotes an individual product model, and each product model is
defined through its representative features that all products of the product category might have.
As all nodes are ordered based on the release dates of the product models, the network comprises
directed links only. A link between two nodes indicates a similarity between these two products, and
the weight of a link depends on the similarity value derived from the Jaccard index.
An example of the application of the framework for constructing the product network (i.e. adja-
cency matrix) from collected data is depicted in Figure 1. The columns of the data table show the
different product models, while the rows of the data table contain the attributes and their values
for each product model. Based on the data table, the similarity matrix is calculated. In turn, the simi-
larity matrix is used to construct the adjacency matrix.
The value of the adjacency matrix is 1, if the similarity value J(Pi , Pj ) between two products Pi
and Pj is larger than a threshold T (see section 3.3); otherwise, the value of the adjacency matrix is
0. This calculation of the adjacency matrix (not considering the weights) can be expressed as
follows:

1 if J(Pi , Pj ) . T
adj(Pi , Pj ) = (4)
0 if J(Pi , Pj ) ≤ 0

Figure 1. Process for constructing the adjacency matrix of the product network, assuming a threshold T = 0.
340 W. LEE ET AL.

3.3. Threshold for identifying evolutionary patterns

A threshold, T, is used for distinguishing an incremental innovation from a radical innovation in the
evolutionary process of products. To determine the threshold, the concept of a component that is
defined as a maximal connected subgraph in a network is used (Jackson 2010). The evolutionary pat-
terns of products can be identified by analysing the linkages between nodes within a component or
by analysing the disconnections between nodes of different components.
On the one hand, product models belonging to the same component have evolved through an
incremental innovation. These product models show strong dependencies, indicating that the fea-
tures of a product model and the next product model did not change much. On the other hand,
the disconnection between nodes of different components indicates a radical innovation. These com-
ponents can be identified due to the low similarity between the product models included in the
different components. In other words, the features among product models belonging to each com-
ponent are considerably different.
Each product evolves going through gradual changes, as all products have delivered some of their
features to the next generation. It can be assumed that all product models within a product category
have some common features. Based on the similarity measure defined, all products are fully con-
nected, and the number of components in a product network is 1. However, if the number of com-
ponents is 1, the analysis of the evolutionary patterns of products would not be able to distinguish
between incremental and radical innovation. Although it is important to investigate gradual changes,
we also want to investigate radical changes, as they have a greater impact on evolution than incre-
mental innovation.
Applying a threshold T larger than zero to the whole product network, the network is split up into
several components. Among these components, a single component may appear dominant com-
pared with other components, or all components may appear similar. The former means that one
component has a major impact on the evolutionary process, and the latter indicates that all com-
ponents have similar effects on product evolution. Furthermore, product models playing an impor-
tant role in the evolutionary process can be identified by measuring network characteristics.

4. Empirical result
4.1. Data
Since smartphones have rapidly evolved and are the result of the integration of various technologies,
they are suitable to demonstrate the evolutionary patterns of a product category. The data about
smartphones that have been sold in the Korean market from 2010 to 2015 have been gathered
from the official websites of smartphone manufacturers (Samsung Electronics, LG Electronics,
Pantech, and Apple) and an online shopping mall. The online shopping mall is Danawa.com, one
of the representative websites for selling digital devices in Korea. The data include 155 products
that had been released between October 2007 (SPH-M4650) and May 2015 (Galaxy S6 Edge). It
covers information on the manufacturer, release date of each product, and the technological features
of each smartphone model. The representative 14 main features of smartphones are selected based
on previous research (Garcia-Swartz and Garcia-Vicente 2015; Kivi, Smura, and Töyli 2012) and are
described in Table 1. These features have most widely been used to analyse mobile phones from
the early 2000 to nowadays (Chwelos, Berndt, and Cockburn 2008; Coccia 2018; Garcia-Swartz and
Garcia-Vicente 2015; Kivi, Smura, and Töyli 2012; Riikonen, Smura, and Töyli 2016).
Among the 14 features that have been identified in previous research, Touch, Global Positioning
System (GPS), Wi-Fi, and Bluetooth can be considered as basic properties that most smartphones
have retained. In collected data, product models containing each of these four features are above
95 percent. Furthermore, the portion of smartphones having all these four features is 95.07
percent. Thus, to reduce the range of potential similarity values, we treat those four features as
 TECHNOLOGY ANALYSIS & STRATEGIC MANAGEMENT 341

Table 1. Description of the representative smartphone features.

Feature Description Unit
Mobile Telecommunication Name of technology used for cellular communication
Technology
Display Size Size of the screen Inch
Application Processor Chipset (AP Performance of the main chipset Gigahertz (GHz)
Chipset)
Random Access Memory (RAM) Amount of main memory Megabyte (MB)
Operating System (OS) Main software (e.g. iOS, Android)
Volume Case size described through three dimension of the smartphone (i.e. mm3
width x height x depth)
Weight Weight of the device Gram
Battery Capacity Amount of electric charge of the battery Milliampere Hour
(mAh)
Camera Pixel Resolution of the camera Million Pixel
Read-Only Memory (ROM) Amount of non-volatile read-only data storage Megabyte (MB)
Touch Existence of a touch screen Binary Value
Bluetooth Existence of Bluetooth Binary Value
Wi-Fi Existence of Wi-Fi Binary Value
Global Positioning System (GPS) Existence of GPS Binary Value

one feature. Therefore, only 11 features are used to investigate the evolutionary patterns of
smartphones.

4.2. Analysis
Based on the Jaccard index and the adjacency matrix, smartphone product network is formed. In this
network, a node represents an individual smartphone model, and a link between two smartphone
models indicates a similarity that is higher than a threshold T. For analysis, network components
are measured and determined. This research focuses on components composed of two or more
nodes as the relationship between products needs to be analysed. The characteristics of the smart-
phone product network for different similarity thresholds are presented in Table 2.
In order to determine the appropriate smartphone product network for the analysis, all smart-
phone product networks with more than one component that contain more than one node per com-
ponent are compared. The first appropriate smartphone product network is the one with T = 0.55,
which consists of 4 components and 149 nodes (Table 2). If the similarity threshold is increased
further, the number of components increases to 16 components but only 133 nodes are in the
network. Consequently, the smartphone product network considered for the analysis is the one
with T = 0.55.

4.3. Evolutionary patterns of smartphones

4.3.1. Evolutionary pattern for the smartphone product category indicating radical
innovation and incremental innovation
The smartphone product network with T = 0.55 is presented in Figure 2. The higher the similarities
between product models are, the thicker the links between the product models are depicted. The
number of components with one node per component is 6. The number of components with

Table 2. Characteristics of smartphone product network, considering different similarity thresholds.

Similarity threshold (T )
Characteristics 0.18 0.27 0.36 0.45 0.55 0.64 0.73 0.82 0.91
Number of components 1 1 1 1 4 16 31 19 12
Number of nodes 155 155 155 154 149 133 89 48 30
Number of links 9831 6194 3480 1717 732 223 89 38 24
342 W. LEE ET AL.

Figure 2. Smartphone product network obtained by applying T = 0.55.

more than one node per component is 4. Among these components, components 1, 2, and 4 are
composed by product models of a single company, and the number of product models included
in these components are 4, 2, and 13, respectively. Component 3 contains 130 product models
that have been released by all four firms.
According to our model, products belonging to a single component have evolved through incre-
mental innovation. An example of incremental innovation are the two product models, KH5200 (node
17) and SHW-M100S (node 18), which are part of component 3. The evolution from KH5200 to SHW-
M100S can be noticed through the increase of RAM from 256MB to 384MB, while the other features
remain equal. Besides, there are many links between product models of each manufacturer in com-
ponent 3. This indicates that all firms rely on incremental innovation as a product evolution strategy.
Furthermore, the disconnection between nodes of different components indicates the existence
of a radical innovation. In Figure 2, a gap between component 1 and components 3 can be inter-
preted as such an occurrence of a radical innovation. In detail, the display size was increased, and
the performances of AP chipset, RAM, battery capacity, camera pixel, and ROM were significantly
improved. Due of these differences, the similarities between product models of those two com-
ponents is low, indicating a radical innovation. Considering only 4 components, it can be stated
that radical innovation happens only very rarely over the course of the smartphone evolution.
Through this analysis, we can state that suggested product evolution model helps identifying
evolutionary patterns of products. The empirical analysis showed that all firms improve their existing
product models through incremental innovation. Only a few firms, though, are capable of developing
new product models with high impact on other products.

4.3.2. Intra-firm evolutionary pattern and inter-firm evolutionary pattern indicating imitation
or innovation diffusion
Using the same smartphone product network as in section 4.3.1, the inter-firm evolutionary patterns
can be presented by displaying only the linkage between product models of different manufacturers
(Figure 3(a)). The patterns provide information on whether a firm imitates competitors’ innovations or
whether a firm diffuses its innovation.
Figure 3(b), which has been generated from the same smartphone product network by showing
linkage between product models of the same manufacturer only, illustrates the intra-firm evolution-
ary patterns. These patterns represent the extent to which the firms depend on their routines. Figure
3(b) shows that most product models are improvements from existing products of the same firm.
 TECHNOLOGY ANALYSIS & STRATEGIC MANAGEMENT 343

Figure 3. Smartphone product network for investigating (a) intra-firm evolutionary pattern and (b) inter-firm evolutionary pattern.

However, most of the product models were also influenced by products of other firms (Figure 3(a)).
This means that, even if firms develop new products under their innovation routine, products that
have been released by competitors are also considered in their development process.
Based on Figures 2 and 3, Apple shows a unique evolutionary pattern compared with the other
three firms. Apple follows its own routine for its product developments more strongly than any
other firm does. Moreover, two disconnections between Apple product models, resulting in three
different components (i.e. component 2, 3, and 4 in Figure 2), indicate the exceptional intra-firm evol-
utionary pattern of Apple. While a few iPhone models constitute component 2 and component 4,
with no interdependencies with other product models of other manufacturers, iPhone 4 and
iPhone 4S are included in component 3 and are connected to products of other firms. In detail,
iPhone 4 affected two products of Samsung Electronics, SHW-M240 (node 35) and SHW-M220
(node 41). iPhone 4S was influenced by a product model of LG Electronics, SU660 (node 34).
These interactions between Apple and other firms indicate the inter-firm evolutionary pattern of
Apple.
Analysing component 3 further, it can be observed that product models released from Pantech
have many incoming links from product models of other firms. Products released from Samsung Elec-
tronics and LG Electronics show many and strong links between the product models launched by the
same firm. Particularly, Samsung is likely to inherit technological features of products they have
launched before. These facts reveal two different evolutionary patterns: (1) In order to develop
new products, Samsung Electronics and LG Electronics are more depend on their own routine
than Pantech; and (2) Pantech mainly contributes to product evolution through the imitation of
other firms’ innovations.
In order to investigate further in detail these intra-firm and inter-firm evolutionary patterns, we
calculate the in-degree centrality and the out-degree centrality. The in-degree centrality helps iden-
tifying products that imitate features of existing products. The out-degree centrality indicates pro-
ducts that influence the design of products that are released later (innovation dissemination).
Figure 4 shows the calculation results of two types of degree centralities for identifying product
models that play a significant role in the evolutionary process. Products are chronologically
ordered, and the four firms are marked in different colours. In Figure 4(a), the product having the
highest value of in-degree centrality is IM-A725L (node 46) released from Pantech. This supports
our previous analysis result that Pantech contributes to product evolution by imitating the inno-
vations of its competitors.
344 W. LEE ET AL.

Figure 4. Centralities of smartphones in the smartphone product network: (a) the in-degree centrality and (b) the out-degree
centrality.

In Figure 4(b), products that show a high out-degree centrality are SHW-M110S (node 21), SHV-
E330K (node 96), LU2300 (node 20), and F240K (node 88). The former two products were launched
from Samsung Electronics, and the latter two from LG Electronics. It shows that Samsung Electronics
and LG Electronics have contributed relatively much to the diffusion of their innovation than other
firms.
To sum up analyses, firms contribute to product evolution in three different ways: implementation
of improved smartphone features, diffusion of early adopted features, and imitation of existing smart-
phone features. Pantech is believed to be an imitator, though it also contributed to the release of
innovative product models through the recombination of existing features. Samsung Electronics
and LG Electronics are considered as disseminators through continuous development of new
product models. Finally, Apple, which is generally considered as an innovator, rarely contributed
to the evolution of smartphones after the initial emergence of smartphones in the market. Apple
follows its own routine and strategy of product model development.

5. Discussion and conclusion

This study suggests a novel model for identifying evolutionary patterns of products and demon-
strates its working by applying real data. There are four major results need to be discussed. First,
the new model for describing product evolution at product-level is based on the features of
product models of a product category. A product model is defined through a set of features that
 TECHNOLOGY ANALYSIS & STRATEGIC MANAGEMENT 345

all product models of a product category could have. The evolutionary patterns over time are
revealed through the analysis of the similarities between product models within a network.
Second, the applicability of our model has been validated with Korean smartphone data. Based on
these results, our model is suitable to investigate product evolutions at product-level. As the
model creation uses a general approach, it can be expected that the model can be applied to
many product categories. Third, inter-firm and intra-firm evolutionary patterns have been observed
in product network. The analysis of the evolutionary patterns revealed that Samsung Electronics, LG
Electronics, and Pantech follow their own routine but also co-evolved through benchmarking each
other. Compared with these firms, Apple, however, shows a unique evolutionary pattern, following
its own routine very strongly. Nonetheless, our result also shows that Apple recognises the need
for observing other firms, in order to survive in a smartphone ecosystem (e.g. component 3 indicates
product models released from Apple have linkages with product models released by other firms
(section 4.3.2)). Fourth, some smartphones, playing significant roles in the product evolution, are
identified by measuring the in-degree and out-degree centrality. Our analysis shows that a
product released by Pantech has the highest value of in-degree centrality, which means Pantech con-
tributes to product evolution by imitating the competitor’s innovation. Products with high out-
degree centralities are products of Samsung Electronics and LG Electronics. This can be interpreted
that they contribute to the diffusion of smartphone innovation.
Our main contributions relate to the methodology used and empirical analysis. The new SNA-
based approach is appropriate to describe product evolution using product-level data. Product evol-
ution is captured through the relationships between continuously launched product models and
through the chronological information of product models. Focusing on product-level analysis is suit-
able for capturing quick responses of manufacturers to rapidly changing market environments. Fur-
thermore, with respect to the empirical analysis, by applying the actual data about the smartphone
market to the suggested model, innovation patterns of firms and their strategies have been detected.
It allows identifying strategies of firms that follow imitation strategies, own routine strategies, incre-
mental innovation strategies, and radical innovation strategies. Products that play important roles in
these evolution processes can be identified through the network visualisation.
There are several implications based on results. From an academic perspective, the research on
product evolution can be extended to product-level. Differently from previous research, which has
analysed product evolution at firm-level only, we have shown that the overall patterns of product
evolution can be identified and a firm’s strategy can be detected through product-level analysis.
From a managerial perspective, this study helps decision-makers can monitor the impact of existing
product models on the evolutionary process more easily. Since our product network shows product
models and their relationships over time, the position of product models can easily be identified.
Second, our product network presents the influence of existing product models that contributed
to the product innovation, as it provides the information on the strength of relationships between
product models. Third, this research enables decision-makers to identify the overall evolutionary pat-
terns of products and the inter-firm and intra-firm evolutionary patterns of products at the same time,
which allows seeing industrial development at a glance. Fourth, our research helps establishing strat-
egies for new product developments based on the understanding of competitors’ strategies. As our
model provides information about what strategy a firm chooses for the next product development, it
can be used as a tool to understand strategies of competitors. Finally, decision-makers can also
respond to the market change rapidly and strategically by comparing the components in a con-
structed product network. The emergence of new component implies that a radical innovation
has occurred, and therefore, firms can take quick actions for developing new product models by
adopting the new technology.
The limitation of this research is that the data only reflects the Korean smartphone market. The
research could be extended to the global market and also be applied to different product categories.
This way, the effectiveness of the new model could be proved in various markets. Furthermore, as this
research is conducted on product-level by focusing on the features of products, the market share of
346 W. LEE ET AL.

products could also be described as a feature. Therefore, future research could consider the market
share of products and the features of products jointly.
Our model can be extended to country-level research by adding features related to the country, if
the global market is targeted. Moreover, our model is applicable to future research on new product
development strategies in emerging industries by using the concept of the inter-firm and intra-firm
evolution. It could help proposing research and development strategies or investment strategies to
take leadership in the emerging industry.

Acknowledgements
This paper was modified and developed from the Ph.D. thesis of the first author.

Disclosure statement
No potential conflict of interest was reported by the author(s).

Funding
This work was supported by the National Research Foundation of Korea (NRF) grant funded by the Korea government
(MSIT) [grant number 2017R1A2B4009376]. This work has partly been supported by the Institute of Engineering Research
at Seoul National University.

Notes on contributors
Woolrim Lee (Ph.D. Engineering) is a senior researcher in Advanced Institutes of Convergence Technology. Her research
focuses on Social Network Analysis, Innovation in Information Systems Field and Information Technology Field. Her
current research covers all aspects regarding Smart City and Digital Transformation.
Jungsub Yoon (Ph.D. Engineering) is an associate research fellow in Science and Technology Policy Institute. His research
field includes Innovation Theory, Industrial Transition, Patent Network Analysis, and Agent-Based Modeling (ABM). His
current research focuses on Digital Transformation, Artificial Intelligence Policy, and Theorising Technological Evolution.
Jeong-Dong Lee (Ph.D. Engineering) is an engineering economist, who is a professor at Seoul National University in the
Technology Management, Economics, and Policy Program. His research field includes Data Envelopment Analysis (DEA),
Innovation Theory, and Industry Dynamics.
Jörn Altmann (Ph.D. Engineering) is a professor in the Technology Management, Economics, and Policy Program of the
College of Engineering, Seoul National University. His research field includes Economics of IT Services, Platform Services,
Complex Systems, and Digital Ecosystems.

ORCID
Woolrim Lee http://orcid.org/0000-0001-7836-1066
Jungsub Yoon http://orcid.org/0000-0001-6328-7617
Jörn Altmann http://orcid.org/0000-0002-8880-9546

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