This paper demonstrates that a simple proposition that technological leadership enables a firm to initiate radical product innovation is potentially misleading, and presents a conceptual framework called "the dilemma of technological leadership." Highiighting the differences between product development and technology development, which have tended to be more or less neglected, from the perspective of problem-solving, the framework shows that mechanisms embedded in a technologically leading firm impede radical product innovation, and that pursuing or establishing technological leadership itself inevitably includes some negative effects on the magnitude of product innovation. Our framework suggests that the dilemma is not simply a matter of mentality of a technological leader, but a result of natural and subjectively rational behavior of a technologically leading firm in order to make the most of its technological advantage in approaching porduct innovation, and that there would be a pitfall for a technological leader which intends to create competitive advantage through radical innovation by resorting to its rich technological capabilities. 1
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