Abstracts
Disruptive Innovations and Firm Level Preparedness in Technology Product Markets: An Exploratory Study
Satyam, Indian Institute of Management Lucknow, Off Sitapur Road, Prabandh Nagar, Lucknow, U.P. (India) 226013
Saji K. B., Indian Institute of Management Lucknow, Off Sitapur Road, Prabandh Nagar, Lucknow, U.P. (India) 226013
Ever since Christensen (1997) originally proposed the theory of disruptive innovations, the failure of products owing to disruptive technologies has been a subject of passionate debate among the theorists and practitioners (Christensen, 2012). The unpredictable technological changes could pose greater hazards to firm-level preparedness as they have the potential of shortening the life cycle of established technology products (Adner, 2002; Shimizu et al., 2004). A disruptive innovation could also help a firm in creating a new market and value network to a firm, which would enable disrupting an existing market and value network of a competitor firm, and displacing an earlier technology and the related products (Christensen et al., 1998). It could also change the market dynamics in an unexpected manner either by creating new set of customers or by providing lower price products with more additional benefits than the existing ones.
A brief review of literature
It was Dosi (1982), who first tried to describe the discontinuous change in technology that upsets the existing paradigms. Even the most competent firms do face enormous difficulties in case of discontinuous shifts in technology domain (Tellis et al., 2009). Firms may also get caught up with decision dilemma while developing new products and processes whether to focus on sustaining innovation or disruptive (Christensen, 1997). In such situations, they need to ideally take the advantage of their core capabilities without letting them be turned into core rigidities (Leonard-Barton, 1992). Researchers in organization theory advocated the role of power and politics in incumbent’s response to disruptive innovations (Mishra and Saji, 2010). We define the notion of disruptive innovation for the present study as a marketing process with which a firm introduces a different set of customer-value driven features, performance, and price attributes relative to the existing competitive offers.
Earlier contributions on discontinuous innovation have focused on the supply side and the firm’s existing resources and capabilities (Tushman and Anderson, 1986). Christensen (1997) brought a new perspective from the context of resource dependency theory, which suggests that a firm’s freedom of action is in fact controlled by actors outside the boundaries of the firm such as customers and investors. Chandy and Tellis (1998) suggested that the firms tend to focus more on future customers and competitors than the current ones due to strong direct and indirect effect of future market orientation. They also supported the argument provided by Christensen (1997) that staying close and listening to the current customers might hurt firms -- as even the customers don’t know what they are going to need tomorrow; and they are also not fully aware about their latent needs. Sood and Tellis (2011) criticised the Christensen’s (1997) definition of disruptive innovation by terming it as too narrow as it captures only cheap, lower and simpler products.
Govindarajan et al. (2011) provided the much needed empirical evidence based on a study conducted on a set of 128 SBUs chosen from across 19 firms, which shows that the mainstream customer orientation has negative affect on disruptive innovation whereas emerging customer orientation has positive affect on disruptive innovation. Tellis et al. (2009) identified forty two factors of radical innovation out of which thirty one are termed as country specific factors, and eleven as firm specific factors. Incumbent firms can manage the disruptive innovation only if they can identify the competitive disruptive technology well on time and work swiftly to make necessary changes. Firm level factors such as willingness to cannibalize, future market orientation, risk tolerance, internal markets, visionary leadership, et al. could help predict to which extent a firm is prepared to deal with the disruption in a designated market (Christensen and Raynor, 2003; Govindarajan et al., 2011; Sood and Tellis, 2005; Tellis, 2006; Tellis et al., 2009).
Objectives of the Study
Incumbent firms are found generally good at innovation while in stable market conditions (Tushman and Anderson, 1986; Chandy and Tellis, 1998; Danneels, 2004). With rapid changes in technology and shifts in business models, even the big firms would become vulnerable (Christensen and Raynor, 2003). From the extant literature, it has been observed that the disruptive technology had been instrumental to the failures of several businesses and firms over the years. It is in this context that the present study has been conceptualized with an intent to assess the firm-level preparedness in technology product markets in managing the disruptive innovations. The specific objectives of the study therefore include: (i) to understand, how the product managers of disrupted firms have dealt with the emergence of disruptive technologies; (ii) to identify the factors that might have led to the failure of technology products in a designated market; and (iii) to explore the possible antecedents to the firm-level preparedness for managing the disruptive innovation in the emerging economies context.
The study methodology
We intend to conduct our study by employing the case study method by referring to a set of product failure cases in India as experienced by a few firms in the context of disruptive innovations. The three specific products considered for the execution of the present study include data transfer devices, music players, and telephones. Although the present study merits from the richness of secondary data, it can not fully substitute the merits of the outcome of an empirical study culled out of primary research.
Results and Implications of the study
The focused survey conducted on the extant literature has enabled us to identify the generic factors that have led to the failure of technology products in the context of disruptive innovations. Further, we were able to identify a set of three categories of potential antecedents to the firm-level preparedness for managing the disruptive innovation in the emerging economies context. It is earnestly hoped that the outcomes of the present study would enable us to demonstrate the relevance of managing disruptive innovations in the emerging economies context like India. Further, once the empirical phase of the study gets completed, we would be in a position to prescribe a practitioner’s agenda for managing the firm-level preparedness in the context of disruptive innovations.
References
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