This study aims at analysing the role of crisis in the technological innovation. It has been taken for granted that organizational crisis has detrimental effects on the survival of organizations. But recent studies showed that organizational crisis has positive effects on organizational learning. They argued that crisis would provide a opportunities for reflecting the effectiveness of existing organizational routine. This study analyses the process and role of crisis in the development of CDMA mobile communication system and argues that crisis has effects on technological innovation when organizations have prior knowledge base which can be exploited in organizational learning. Secondly, it is argued that crisis can result in organizational transformation which facilitates organizational learning by integrating prior knowledge base and new knowledge. Thirdly, it is suggested that crisis may be good facilitator for organizational learning in case of competence-enhancing innovation rather than competence-destroying innovation.