When a firm continues to invest in old technologies while the market demands new innovations, this is an example of:

The situation described, where a firm persists in investing in outdated technologies despite a market demand for new innovations, embodies the concept of competitive inertia. This term refers to a tendency within organizations to maintain their current practices and strategies, even in the face of changing market conditions and customer needs.

Competitive inertia can occur due to various reasons, such as a reliance on past successes, an aversion to change, or a lack of awareness regarding emerging trends. As firms focus their resources on traditional methods, they risk falling behind competitors who embrace innovation and adapt to the evolving landscape. This resistance to change ultimately harms the firm's ability to compete effectively, making it relevant to the current question regarding the consequences of failing to innovate.

In contrast, strategic advantage refers to an edge over competitors obtained through unique resources or capabilities. Strategic dissonance describes a misalignment between a company’s strategic goals and its operational practices, while cost leadership relates to a strategy focused on being the lowest-cost producer in the industry. These concepts do not capture the essence of continuing reliance on outdated technologies amid a demand for change, thereby underscoring why competitive inertia is the most fitting choice in this scenario.