At the risk of annoying some people, we shall refer to these as the “Hayekian” and “Keynesian” perspectives. The Hayekian perspective conceives of investment as the adjustment to equilibrium and thus the optimal amount of investment is effectively a decision on the optimal speed of adjustment. A firm may decide it needs a factory (the “capital stock” decision), but its decision on how fast to build it, how much to spend each month building it, etc. — effectively, the “investment” decision — is a separate consideration.
“When visionary executives and technologists do see the disruption coming, they frame it as a threat, seeing that their companies could be imperiled if these technologies succeed. This framing as a threat rather than an opportunity is what elicits a resource commitment from the established firms to address the technology. But because they instinctively define […]