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Firm’s Innovation Expectation, Potential and Actions: Impressions on the Japanese Videogame Console Market

Under the theoretical developments proposed by the Theory of the Firm, it is possible to understand the firm as the primary site for innovation. Innovation effort is justified by the need to generate solutions which should be validated in the market. This market validation process enables one to identify the life cycle of the solution, represented by the “S-curve”. Whether due to its sales volume, market share and even technological improvements, there is a sequence of events that are, invariably, repeated in all technologies: onset, growth, maturing and decay. This paper presents, based on a model for innovation expectation and potential, an analysis of the firms’ actions along different S-curves. To do this, sales volume historical data of videogame consoles in Japan were used. The most interesting finding is that the firms terminate the life cycle of each technology keeping, simultaneously, two or more different versions of the consoles.